Obama Student Loan Debt Relief Plan

marcos

[url][http://moneyland.time.com/2011/10/26/obamas-student-loan-plan-to-offer-welcome-debt-relief/[/url]

Obama’s Student Loan Plan to Offer Welcome Debt Relief
By KAYLA WEBLEY | @kaylawebley | October 26, 2011 |
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JOSE LUIS PELAEZ / GETTY IMAGES
In a move sure to be popular with recent college graduates, the Obama Administration released details of a plan Tuesday that will ease the burden of student loan debt. The first and perhaps most welcome part of the plan moves up the start date on the income-based repayment program passed by Congress last year from 2014 to 2012. According to a statement released by the Administration, under its “Pay As You Can” plan, an estimated 1.6 million students will be able to cap their loan payments at 10% beginning next year.

(GALLERY: The 20 Colleges With the Most (and Least) Student Debt)

Additionally, beginning in January, the some 6 million students who hold both direct government student loans and government-backed private loans will be able to consolidate their debt into one government loan. In effect, that part of the plan allows students to refinance private loans at a lower government rate, which according to the Administration amounts to an interest rate reduction of up to 0.5%.

The plan will also allow student debt to be forgiven after 20 years, compared with 25 years under current law.

Obama will formally announce the executive action — the third in as many days aimed at bypassing Congress and boosting his re-election campaign — at an event in Denver later today, the same day as a report from the non-profit College Board shows tuition and fees at public colleges nationwide rose more than 8% this year. It also comes on the heels of USA Today story last week, which — using data from the Department of Education, the Federal Reserve Bank of New York and other sources — found that for the first time ever student loan debt is expected to hit $1 trillion. It is also the first time Americans have owed more on student loans than on credit cards.

The skyrocketing student loan debt is especially unwelcome for the Class of 2011, which received the unwelcome distinction of becoming the most indebted graduating class ever. In fact, USA Today found students today are borrowing double the amount they did 10 years ago — after adjusting for inflation.

(MORE: Scariest Student Loan Debt Numbers Ever: $100 Billion, $1 Trillion)

Not only are Americans taking on more student debt, they are not paying it off as quickly. In the wake of the recession, consumers have prioritized paying off credit cards and mortgages, which often carry higher interest rates, at the expense of student loans. In fact, over the past five years the total outstanding student loan debt has doubled and today more than 1 in 10 people with student loans are more than three months behind in their payments.

But while the news is good for current and former students, it is less positive for the private companies that lend money to students. Shelly Repp, president of the National Council of Higher Education Loan Programs, told the Wall Street Journal, that banks and other firms that supply student loans stand to lose assets and income as a result of the plan. According to the WSJ story, investors rushed to sell off the stocks of some lenders in the wake of the news, including SLM Corp., the parent company of Sallie Mae, which lost nearly 13% Tuesday, while another education-finance company, Nelnet Inc., fell by nearly 7%.

Kayla Webley is a Writer-Reporter at TIME. Find her on Twitter at @kaylawebley or on Facebook at facebook.com/kaylawebley. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

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It's about time, maybe I will not go occupy Wall Street now, sounds reasonable to me. He definitely has my vote between this and the health care plan. Wow, someone that gives a shit about the middle class!

Jason P

Is this his student loan debt relief plan or his re-election plan?

marcos

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

Right, either way I'm game, this is an issue that has a direct bearing on me. Hate the game, not the player.

Newch91

I still have a year and a half to go or another two years, depending on where I'm standing for credits. Sounds like a good plan, but I'll have to read more into it.

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

Jason P

marcos wrote:

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

Right, either way I'm game, this is an issue that has a direct bearing on me. Hate the game, not the player.

I'm not saying it's a bad idea. And if tuition was as high 15 years ago as it is today, it would probably have direct bearing on me as well. The cost of education has gotten to the point that I find it hard to believe anyone goes to private schools anymore.

But, the plan also allows Obama to recapture a base of voters that have become disenchanted with him.

Jason P

Newch91 wrote:

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

That threw me too. But I guess most people's credit card limit is well below $10K whereas a student loan can be extraordinarily high.

Newch91

Jason P wrote:

Newch91 wrote:

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

That threw me too. But I guess most people's credit card limit is well below $10K whereas a student loan can be extraordinarily high.

Yeah. My loan total right now in my 2.5 years is $13,332, and that's without interest, which I don't know how that works. I go to one of the branches of UConn and my 2.5 year loan total is still less than 1 year of being up at the main campus in Storrs. Good thing I've had the Pell Grants, a couple of other grants, and the Capitol Scholarship.

marcos

Jason P wrote:

marcos wrote:

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

Right, either way I'm game, this is an issue that has a direct bearing on me. Hate the game, not the player.

I'm not saying it's a bad idea. And if tuition was as high 15 years ago as it is today, it would probably have direct bearing on me as well. The cost of education has gotten to the point that I find it hard to believe anyone goes to private schools anymore.

But, the plan also allows Obama to recapture a base of voters that have become disenchanted with him.

I understand the high cost of education at certain schools but not all. Many economists have predicted that this is the next bubble, much like housing, to burst. It's nice that it's being addressed now. It would be a shame to see people walking away from their student debt like people did with mortgages as education is much more of a valued asset that one can truly treasure for the rest of their lives.

I have been disenchanted with him as you suggest, for economic reasons, but for reasons like this and health care will be back on board in 2012.

Jason P

marcos wrote:

I understand the high cost of education at certain schools but not all. Many economists have predicted that this is the next bubble, much like housing, to burst.

I agree. There have been several things that have occurred in my adult life that made me scratch my head and think “How is this possible and self-sustaining?” and “Why is everyone going along with this like it makes sense?”.

1) Dot.com stocks being handed out like candy a decade ago
2) Crazy rise in the cost of property from the late 90’s to a couple of years ago
3) Crazy rise in the cost of college tuition in the last 15 years

If you’re going to college and you’re not in a field that offers high pay, I don’t see how one can reason spending over $20K a year on it.

EdsonNascimento

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

That's exactly what I thought when I read this earlier. He's obviously in trouble and knows it, so he's pandering.

Who's paying for all this?

EdsonNascimento

Jason P wrote:

marcos wrote:

I understand the high cost of education at certain schools but not all. Many economists have predicted that this is the next bubble, much like housing, to burst.

I agree. There have been several things that have occurred in my adult life that made me scratch my head and think “How is this possible and self-sustaining?” and “Why is everyone going along with this like it makes sense?”.

1) Dot.com stocks being handed out like candy a decade ago
2) Crazy rise in the cost of property from the late 90’s to a couple of years ago
3) Crazy rise in the cost of college tuition in the last 15 years

If you’re going to college and you’re not in a field that offers high pay, I don’t see how one can reason spending over $20K a year on it.

You are spot on. At some point folks are going to realize that pretty campuses and overpaid professors don't really mean a whole lot in the real world.

inmytree

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

yeah, what a dick...how dare he attempt to help...that f-r is just pandering...

this just in, Obama had lunch today...personally, I think the only reason he ate was to sustain energy to campaign...damn that O-bama....damn him to hell....

Jason P

EdsonNascimento wrote:

Who's paying for all this?

Obama is trying to convince the American public that this guy will ...



All we have to do is let him raise taxes.

EdsonNascimento

inmytree wrote:

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

yeah, what a dick...how dare he attempt to help...that f-r is just pandering...

this just in, Obama had lunch today...personally, I think the only reason he ate was to sustain energy to campaign...damn that O-bama....damn him to hell....

Well, the fact is the main part of this was not Obama. It was the Democratic controlled Congress. So, you should be pissed at all of them (well aware you were being sarcastic).

But, again - great concept. Who's paying for this? He's just insisted that they write off even more (speeding the process up) than they previously were forced by Congress to do. And a lot of it is our (the gov't) loans. I don't recall voting for you taking even more money out of an already stressed gov't.

This generation will go down as the Generation of Yes - as in we can do whatever we want b/c mommy and daddy will come to the rescue. No need to make good decisions in life. Hopefully, this will be the birth of no.

So, yes - it is pandering. Until someone explains who is paying for this. It's easy to give money away. Not so easy to take it. They are taking it. Who's it coming from? How about Obama explain that for transparency (or is that no longer important in hopey changey land?).

Go Beavers

Jason P wrote:

Newch91 wrote:

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

That threw me too. But I guess most people's credit card limit is well below $10K whereas a student loan can be extraordinarily high.

I think the average household credit card debt is $10-$12,000 (households with 10c member: $13,000-$15,000)

EdsonNascimento

Go Beavers wrote:

Jason P wrote:

Newch91 wrote:

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

That threw me too. But I guess most people's credit card limit is well below $10K whereas a student loan can be extraordinarily high.

I think the average household credit card debt is $10-$12,000 (households with 10c member: $13,000-$15,000)

Except you didn't deduct amounts for flipped items.

Jason P

Go Beavers wrote:

I think the average household credit card debt is $10-$12,000 (households with 10c member: $13,000-$15,000)

I take it you got the PJ20 Hotel package then?

marcos

Jason P wrote:

Newch91 wrote:

I just can't believe student loan debt for 2011 is at $1 trillion and more than credit card debt.

That threw me too. But I guess most people's credit card limit is well below $10K whereas a student loan can be extraordinarily high.

Credit Card debt is still easily discharged in bankruptcy, and yes it is still easy to do despite changes made. Student loan debt is hard to discharge unless there are extraordinary circumstances. I think most people understand the value of education and want to pay them back but would like to do so without having to move back in with their parents.

Newch91

What do they mean when they say "forgive" your student debt?

inmytree

EdsonNascimento wrote:

inmytree wrote:

Jason P wrote:

Is this his student loan debt relief plan or his re-election plan?

yeah, what a dick...how dare he attempt to help...that f-r is just pandering...

this just in, Obama had lunch today...personally, I think the only reason he ate was to sustain energy to campaign...damn that O-bama....damn him to hell....

Well, the fact is the main part of this was not Obama. It was the Democratic controlled Congress. So, you should be pissed at all of them (well aware you were being sarcastic).

But, again - great concept. Who's paying for this? He's just insisted that they write off even more (speeding the process up) than they previously were forced by Congress to do. And a lot of it is our (the gov't) loans. I don't recall voting for you taking even more money out of an already stressed gov't.

This generation will go down as the Generation of Yes - as in we can do whatever we want b/c mommy and daddy will come to the rescue. No need to make good decisions in life. Hopefully, this will be the birth of no.

So, yes - it is pandering. Until someone explains who is paying for this. It's easy to give money away. Not so easy to take it. They are taking it. Who's it coming from? How about Obama explain that for transparency (or is that no longer important in hopey changey land?).

wait a minute, first you say this:

you wrote:

That's exactly what I thought when I read this earlier. He's obviously in trouble and knows it, so he's pandering.

then you say, naaaaw, it's the democratic congress...which is it...? My guess is your supporting Mittens for prez, as you and he like to change positions within minutes...

anyhoo...It's my understanding this will be cost neutral...google is your friend, I don't have time to do for you...

as for the rest of your post...It's sad...I do wonder were this "generation of yes" is ....because all I see lately is a generation of "selfish whiners who worry only about themselves"...

EdsonNascimento

inmytree wrote:

wait a minute, first you say this:

you wrote:

That's exactly what I thought when I read this earlier. He's obviously in trouble and knows it, so he's pandering.

then you say, naaaaw, it's the democratic congress...which is it...? My guess is your supporting Mittens for prez, as you and he like to change positions within minutes...

anyhoo...It's my understanding this will be cost neutral...google is your friend, I don't have time to do for you...

as for the rest of your post...It's sad...I do wonder were this "generation of yes" is ....because all I see lately is a generation of "selfish whiners who worry only about themselves"...

What? So funny. I have no idea who I'm for. The election is 12 months away. There's still a lot to understand about the candidates.

But, the fact the Obama is coming out and pandering NOW has nothing to do with the actual facts of when this whole ball started rolling. On one hand, I was criticizing Obama for using this as a means to getting his base back, and on the other I'm telling you who is really to blame for getting this whole thing rolling. So, it's not flipping. It's looking at 2 different facets of the same situation.

AND - wait for it - now Obama is trying to speed the process up. It's not that difficult to get this if you try. I sometimes think folks have fallen prey to politicians' and media's gotcha mentality instead of trying to understand each other.