Obama Unveils Plan to Ease Debt Burden on Graduates
President Obama on Wednesday spoke in front of a group of about 4,000 students at the University of Colorado at Denver, detailing his plan to reduce the debt burden on America’s young graduates. Obama said he will speed up the plan to cap student loan payments at ten percent of income, starting the it in 2012 instead of 2014. According to White House estimates, the plan could reduce monthly loan payments for as many as 1.6 million graduates.
Americans now owe more on student loans than they do on credit card bills, and the total is expected to surpass $1 trillion this year. In fact, student loans and increasing debt defaults were among the popular topics for protesters at the Occupy movements around the country. Under the new plan, student debt will be forgiven after 20 years, instead of the currently mandated 25.
There are more than 36 million Americans with outstanding student loans, yet less than half-a-million are currently utilizing the income-based repayment system. The revised plan will also allow graduates to bundle together certain federal loans, combining them into a convenient single payment. Officials say this eliminates the risk of default stemming from juggling multiple debts. The change is part of a series of actions taken by Obama that do not require Congressional approval.