Obama to Offer Student Loan Relief

By: Kimberly Hefling, Associated Press; CBS
By: Kimberly Hefling, Associated Press; CBS

Washington, D.C. (AP) - Millions of student loan borrowers will be eligible to lower their payments and consolidate their loans under a plan President Barack Obama intends to announce Wednesday, the White House said.

Obama will use his executive authority to provide student loan relief in two ways.

First, he will accelerate a measure passed by Congress that reduces the maximum repayment on student loans from 15 percent of discretionary income annually to 10 percent. The White House wants it to go 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.

Second, he will allow borrowers who have loans from both the Family Education Loan Program and a direct loan from the government to consolidate them into one loan. The consolidated loan would be up to a half percentage point less. This could affect 5.8 million more borrowers.

Education Secretary Arne Duncan told reporters on a conference call that the changes could save some borrowers hundreds of dollars a month.

"These are real savings that will help these graduates get started in their careers and help them make ends meet," Duncan said.

Obama is expected to unveil his plan at a stop in Denver. The White House said the changes will carry no additional costs to taxpayers.

Last year, the Democratic-controlled Congress passed a law that reduced the cap and moved all student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from government-backed loans in the Family Education Loan Program that were issued by private lenders but basically insured by the government. The law was passed along with health care overhaul with the anticipation that it could save about $60 billion over a decade.

Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.

Outside of mortgages, student loans are the No. 1 source of household debt, the White House said.

Also on Tuesday, the Education Department and the Consumer Financial Protection Bureau announced a project to simplify the financial aid award letters that colleges mail out to students each spring. A common complaint is that colleges obscure the inclusion of student loans in financial aid packages to make their school appear more affordable, and the agencies hope families will more easily be able to compare the costs of colleges.

Separately, James Runcie, the Education Department's federal student aid chief operating officer, told a congressional panel on Tuesday that the personal financial details of as many 5,000 college students were temporarily available for other students using the site to view on the Education Department's direct loan website earlier this month. Runcie said site was shut down while the matter was resolved, and the affected students have been notified and offered credit monitoring.

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  • by Anonymous on Oct 27, 2011 at 08:58 PM
    Seems to be a promise of a man bent upon getting votes from a younger demographic without care as to how it impacts other taxpayers. A decision that is totally irresponsible as it passes the burden of debt on to others who did not take out a student loan. The aging population does not receive the same level of attention. Note the cuts to Medicare, limitations on access to healthcare, extending the retirement age, and placing the burden upon those people who have been paying into the system for decades. Obama is a socialist parasite. This next election should be about the economy and jobs. BHO should have a one term presidency like Jimmy Carter before irreparable damage is done to our country. Comparing the GI Bill after WWII to this proposed student loan legislation is not a good analogy for many reasons.
  • by mc on Oct 27, 2011 at 08:37 AM
    Another handout by this President. If you can't govern at least give more money to those who did not earn it. Must be more obama money from Obama's stash.In other words our pocket books. If you can't pay back a loan don't get one .
  • by The administration is out of controll on Oct 27, 2011 at 07:32 AM
    He is bypassing congress and doing what he wants. You all do not see the danger with that? Ok now imagin instead of him doing it imagine someone else you did not like or trust doing it. Because if he can do it, any president can do it.
    • reply
      by Gerry on Oct 27, 2011 at 06:06 PM in reply to The administration is out of controll
      It's not secret. Nobody is saying that he is exceeding his authority. It's not like assassinating a US citizen (3 actually, including a 16 year old) far from any battlefield with no due process and no warrant and basing the assassination on secret law. Now, THAT's a problem. Because any president can do it and will.
  • by Steve on Oct 27, 2011 at 06:29 AM
    Gerry is just an ovomit sheep....a troll for leftist and the lazy, dont pay attention to him/her
    • reply
      by Gerry on Oct 27, 2011 at 06:07 PM in reply to Steve
      Congratulations, you have written the perfect ad hominem post. I assume this is because you have no other argument.
  • by Gerry Location: Tallahassee on Oct 27, 2011 at 04:56 AM
    If you say Obama is wrong every day about everything, you have no credibility. There are plenty of good reasons to criticize Obama, e.g., failing to break up too big to fail banks, failing to reinstitute Glass-Steagall, but this isn't one of them. This program benefits young middle class debtors. Good for Obama.
    • reply
      by me on Oct 27, 2011 at 05:23 AM in reply to Gerry
      Now tell us who it hurts.
      • reply
        by Gerry on Oct 27, 2011 at 07:48 AM in reply to me
        There was a GI Bill after WW II. Many vets went to college under this bill. Who did it hurt? These changes Obama is proposing means a college grad will have his(her) debt forgiven after 20 years. About the time his (her) children are going to college. Or would it be better to have 2 generations of the same family paying off student loans simultaneously?
        • reply
          by me on Oct 27, 2011 at 09:34 AM in reply to Gerry
          But then the parents who just had their debt forgiven will be paying an increase in taxes to cover the debt forgiven. It's redistribution. We still have GI bills in one way or another and our taxes pay for those well deserved GI bills after their service to our country. The people you're comparing our WW 2 vets to have not served this country as a "collective" and don't deserve it, nor the comparison. The student will not start paying off student loans until they graduate. Just maybe during the ONE year overlap of simultaneous loans the child will see their parents pay off their student loans and actually LEARN the right way to do things. IMO, you act as if the parents by getting debt forgiven after 20, they will then turn around and put the money towards the child's education; if so, does the child need a loan? Now, tell me again who it hurts because you did not answer my question.
        • reply
          by Gerry on Oct 27, 2011 at 05:53 PM in reply to Gerry
          @ me All those vets going to college after WW II. Far more than any other war because there were far more vets. Who benefited?
    • reply
      by Jack on Oct 27, 2011 at 06:19 AM in reply to Gerry
      Gerry, you're just a socialist. The federal government should get out of the student loan business. This is just a re-election ploy to lure young, stupid voters. What happened to actually working your way through college? Not taking out huge loans that will never be paid back in the sum of 1 trillion dollars in the US??
      • reply
        by Gerry on Oct 27, 2011 at 05:55 PM in reply to Jack
        Why should the US get out of the student loan business? Other than it doesn't fit into your ideology?
    • reply
      by M on Oct 27, 2011 at 07:21 AM in reply to Gerry
      It punishes those of us who are responsible. It instills a culture that you can be irresponsible and the government will take on the risk. I have major qualms with this. I owe mega bucks for my undergraduate degree and I just took out another loan for my graduate school. I have and will continue to pay the loan back. That is my responsibility. I think it is unfair to me and others like me who take care of our own responsiblities, but others do not.
      • reply
        by Gerry on Oct 27, 2011 at 05:59 PM in reply to M
        @M The changes are that someone will pay up to 10% of discretionary income for 20 years. If there is any remaining debt it will be forgiven. Correct? Irresponsible? Paying up to 10% of discretionary income even after 40 years of age is irresponsible??
        • reply
          by me on Oct 28, 2011 at 06:40 AM in reply to Gerry
          What Does Discretionary Income Mean? The amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money spent on luxury items, vacations and non-essential goods and services....Do the math folks! It appears this does fit into your socialist ideology....pretty much a free education at taxpayer expense.
  • by Moishe on Oct 27, 2011 at 03:27 AM
    "The White House said the changes will carry no additional costs to taxpayers." vs "...the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected." In cases where the debt is forgiven, who will absorb the loss? Taxpayers. Unfortunately, this is just the beginning of the election year bribes.
  • by master of illusion on Oct 26, 2011 at 07:01 PM
    anything to look good, anything... he is like a fly bouncing around a window, no clue what to do next. And he continues to get in the news by making "feel good about me" decisions... sorry, you just haven't done enough, and this mix of campaigning and decisions to make your image improve doesn't fool me. Either does all the nonsense talk from the other side. Can we have a real leader please step up and put them all in their place? And remind both sides they work for us, not the other way around?
    • reply
      by Anonymous on Oct 26, 2011 at 08:28 PM in reply to master of illusion
      Best analogy I have read in a long time. Spot on!
  • by me Location: here on Oct 26, 2011 at 06:06 PM
    These knucklehead students...I can't wait to be there for their A-HA moment. Laughing at them...btw.
  • by TK on Oct 26, 2011 at 06:05 PM
    what the heck ever happened to "live within your means"??? why are students getting loans to pay for college to begin with? there aren't enough jobs for them all. In the meantime I can't get a reliable, honest, knowledgeable serviceman to fix my air conditioner "right". a credit card happy society is soon going to come to an end.
  • by The Beeze Location: Perry on Oct 26, 2011 at 05:45 PM
    I'm betting the youngsters are dumb enough to fall for it.
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