Obama Announces Student Loan Relief Plan

AP: “Obama Announces Help For Student Loan Borrowers.” From an October 26 Associated Press article:

President Barack Obama recalled his struggles with student loan debt as he unveiled a plan Wednesday that could give millions of young people some relief on their payments.

[...]

Obama's plan will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. He will put it into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.

He will also allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.

Student loans are the No. 2 source of household debt. The president's announcement came on the same day as a new report on tuition costs from the College Board. It showed that average in-state tuition and fees at four-year public colleges rose $631 this fall, or 8.3 percent, compared with a year ago. Nationally, the cost of a full credit load has passed $8,000, an all-time high. [Associated Press, 10/26/11, via ABCNews.com]

White House: “Obama Administration To Lower Student Loan Payments For Millions Of Borrowers.” In an October 25 press release, the White House outlined the Obama administration's plan to help Americans “manage student loan debt.” The press release stated that the plan will “offer recent graduates an opportunity to consolidate loans and reduce interest rates.” From the press release:

Today, the Obama Administration announced it is taking steps to increase college affordability by making it easier to manage student loan debt. The announcement is part of a series of executive actions to put Americans back to work and strengthen the economy because we can't wait for Congressional Republicans to act.

The Administration is moving forward with a new “Pay As You Earn” proposal that will reduce monthly payments for more than one and a half million current college students and borrowers. Starting in 2014, borrowers will be able to reduce their monthly student loan payments to 10 percent of their discretionary income. But President Obama realizes that many students need relief sooner than that. The new “Pay As You Earn” proposal will allow about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments. Additionally, starting this January an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates. [WhiteHouse.gov, 10/25/11]

Conservatives Attack Student Loan Relief Plan

Guilfoyle: Obama's Student Loan Relief Plan Is “Campaigning, It's Politics .... He Wants To Buy Some Votes Of The Youth.” During the October 26 edition of Fox News' The Five, co-host Kimberly Guilfoyle suggested Obama's plan to provide some relief to people with student loans was actually an attempt to “buy some votes of the youth.” From Fox News' The Five:

GREG GUTFELD (co-host): Kimberly, I want to ask you, though. The real problem here is tuition. It's not the loans. If the tuitions were lower you wouldn't have this problem with the loans. But because you have the loans, the tuition goes up.

KIMBERLY GUILFOYLE: Right, but where's the incentive then to lower the tuition? Some people in colleges and institutions, they like their money. But what this is about is campaigning, it's politics, it's 2012. He wants to buy some votes of the youth. It makes sense.

GUTFELD: Yeah.

GUILFOYLE: These are the people who were very popular, came out for him, supported his presidency. He needs them again. Even more so this time. So this a way to rally them kind of speak to the people that are protesting and the college students. [Fox News, The Five, 10/26/11]

Bolling: Obama's Plan To Help Americans With Student Loan Debt Is An Attempt To “Buy The Young Vote.” During the October 25 edition of The Five, co-host Eric Bolling attacked Obama's plan to help Americans consolidate and lower their payments on student loans after college before it was even announced. Bolling proclaimed the administration was attempting to “buy the young vote” and asserted that it “should be illegal.” [Fox News, The Five, 10/25/11]

Lou Dobbs Claimed Obama's Plan Offering Relief To Student Loan Recipients Is About “Getting Re-Elected.” In an October 26 Facebook post about Obama's new student loan relief plan, Fox's Lou Dobbs wrote, “this is more about getting re-elected than it is spurring economic growth.” [Facebook, 10/26/11]

Perino Called Obama's Announcement Of Student Loan Relief Plan A “Campaign Speech.” In an October 26 Twitter post, co-host for Fox News' The Five Dana Perino wrote:

[Twitter, 10/26/11]

Hoft: “Obama's Plan To Bailout Student Loan Recipients Is His Latest Attempt To Buy Votes At The Expense Of The American Taxpayer.” From an October 26 blog post on Jim Hoft's Gateway Pundit blog:

Obama's plan to bailout student loan recipients is his latest attempt to buy votes at the expense of the American taxpayer. It also happens to be the latest move in his Cloward Piven strategy to destroy the US economy.

Free Obama Money for ... special interest groups.

Obama announced a new plan today that will add billions to his record debt and erode the US economy by giving free money to students who borrowed their way through college.[Gateway Pundit, 10/26/11]

Student Loan Debt Is A Growing Burden

Data Shows Average Debt For Students Graduating From College Is Rising At A Staggering Rate. Data analysis by The Project on Student Debt found that the average debt for graduating seniors at public universities is "$22,200 -- 20% higher than in 2004." The average debt for graduating seniors at private for-profit universities was "$33,050 - 23% higher than in 2004." From the January 2010 study titled Quick Facts about Student Debt:

Average debt levels for graduating seniors with student loans rose to $23,200 in 2008 -- a 24% increase from $18,650 in 2004.

In 2008:

• At public universities, average debt was $20,200 -- 20% higher than in 2004, when the average was $16,850.

• At private nonprofit universities, average debt was $27,650 -- 29% higher than in 2004, when the average was $21,500.

• At private for-profit universities, average debt was $33,050 -- 23% higher than in 2004, when the average was $26,850. [The Project On Student Debt, Quick Facts about Student Debt, January 2010]

U.S. Department Of Education: Student Loan Default Rate At 8.8 Percent -- The Highest It Has Been In More Than A Decade. The U.S. Department of Education announced in September that the latest national student loan cohort default rate is at “8.8 percent.” This is an increase from the 7.0 percent rate from the previous fiscal year, and is the highest rate in more than a decade. The cohort default rate is defined as “the percentage of borrowers who enter repayment in a fiscal year and default by the end of the next fiscal year.” From the announcement:

The U.S. Department of Education today released the official FY 2009 national student loan cohort default rate, which has risen to 8.8 percent, up from 7.0 percent in FY 2008. The cohort default rates increased for all sectors: from 6.0 percent to 7.2 percent for public institutions, from 4.0 percent to 4.6 percent for private institutions, and from 11.6 percent to 15 percent at for-profit schools.

The rates announced today represent a snapshot in time, with the FY 2009 cohort consisting of borrowers whose first loan repayments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. More than 3.6 million borrowers from 5,900 schools entered repayment during this window of time, and more than 320,000 defaulted. Those borrowers who defaulted after the two-year period are not counted as defaulters in this data set. [U.S. Department of Education, 9/12/11, accessed 10/26/11]