President Barack Obama has taken steady measures to relieve university students of their financial tertiary debt. This is part of his plan to ease the economic pressures obtained through immense student loan debt. On Monday, the Washington Post reported, Obama signed a presidential order allowing millions of student borrowers to cap their payments at 10% of their monthly income. He ordered the Education Department to extend the monthly repayments to approximately 5 million students by December 2015.
The Financial Burden of Graduates
Obama proclaimed in the Washington Post earlier this week: “We are here today because we believe that in America, no hardworking young person should be priced out of a higher education”. Obama mentioned that the cost of university and the heavy weight of student debt are damaging middle-class families and placing graduates at an economic drawback before they even enter the work force.
According to the Time, economists have noted that more than $1 trillion exists in student loan debt. This figure is troubling the economy and is having a significant impact upon university graduates. The outrageous debt is limiting graduates to buy cars, take out mortgages and spend money to boost the economy. ABC News claimed that 71% of those gaining a basic bachelor’s degree graduate with debt averaging $29,400 according to the White House. Obama stated, “At a time when higher education’s never been more important, it’s also never been more expensive. Over the last three decades, the average tuition at a public university has more than tripled, at the same time that the typical family’s income has gone up just 16 percent”. Graduates are being relieved of the pain of debt through Obama’s new proposed plan.
Obama’s Proposed Plan
President Obama’s proposed plan is ensured to “further lift the burden of crushing student loan debt”, stated by the White House, according to Time. The plan will limit students’ repayments at 10% of their monthly income, benefitting around 5 million students who took out loans before October 2007 or stopped borrowing by October 2011.
Other aspects of the plan involve collaborating with Intuit, Inc and H&R Block, two of the United State’s largest tax preparation firms. The collaboration is aimed at implementing a student loan repayment option and trial a program to test the efficiency of student loan counseling. Time further states that under the executive plan, for instance a 2009 graduate with a student loan debt of $26,500 who earns $39,000 annually as a primary school teacher would see an annual reduction of $1,500 in annual loan repayments.
Despite the relief plan intended for graduates and students, the Republican party expressed its opposition against Obama’s reforms. House Speaker John Boehner, stated in Time, “Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education, or improve access to federal student loans – nor will it help millions of recent graduates struggling to find jobs in the Obama economy”. Essentially, his statement emphasized the little change that would come out of the change that Obama is claiming to undertake. ABC News reported Republican National Committee spokesman stating that President Obama is “playing politics” by diverting attention away from the high unemployment crisis among recent university graduates.
Obama’s plan to ease students’ pain of endless financial debt is yet to surface in the near future. Graduates and current students are constantly faced with the nightmare of dealing with debt that have been accumulating across their tertiary study. With the new reform in place, students will be able to comfortably deal with their financial woes. Despite the negative feedback brought upon by the Republican political party, only time will tell whether Obama’s executive action will receive a successful outcome.