College is known as an investment in the future. But that investment is becoming a burden for many students. The President will announce some changes today that could lower the amount students pay for student loans.
Over the past three decades, the price of college has quadrupled. That price increase, combined with less state funding at public universities, means students are paying more. The President hopes a couple of changes to existing programs will ease the pain for millions of Americans struggling with college debt.
Higher education comes with a high price tag. The President is trying to ease the burden on college students and graduates entering the real world.
"We have to make smart investments. And what smarter investment is there, than our children's education?" said Melody Barnes from the Domestic Policy Council.
The White House will announce today two changes that will lower the amount students pay for college loans. First, students or graduates who consolidate their combination Direct Federal Loans and other federal loan programs could see a half percent interest rate cut simply for combining it into one payment. Second, the President will adjust the "Pay as You Earn" program for low income students. The adjustment will decrease the percentage and length of payment, possibly giving more students the chance to go to school.
"Making sure they have opportunities that are available to them. Making sure they are prepared for college and career," Barnes said.
Graduates qualifying for the "Pay as You Earn" program will have to pay 10 percent of their discretionary income for up to 20 years. If there is still a balance after that time frame, the remaining due would be wiped away. Those requirements are dropping from the 15 percent for up to 25 years in place now. White House advisors saying, these tough economic times call for tough budget decisions.
"We have got to reign in wasteful spending. We have got to cut our budget and in some cases we have to stop spending on things we care about just because we can't afford them anymore," said Barnes.
According to the White House, both changes to these existing programs could help over 7 million people decrease their payments. But, the time to act is soon. To qualify for the debt consolidation, students need to register between January and June.
The decreases are not supposed to cost taxpayers anything. The money saved by people in the debt consolidation program will be offset by the administrative costs of processing one payment instead of several payments by borrowers.
Source: http://www.fox43.com/news/wpmt-amnews-obama-college-loans,0,485486.story
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