President Obama announced a plan to ease the burden of student loans on college graduates on Wednesday by capping federal student loan repayments at 10 percent of discretionary income, Reuters reports.
The president spoke to a crowd at the University of Colorado in Denver and said he would take executive action to begin the new steps starting in January.
"Our economy needs it right now, and your future could use a boost right now," Obama said.
White House officials said it could help up to 1.6 million people and reduce their loan payments each month by as much as a couple hundred dollars, according to the Washington Post.
"Steps like these won't take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference," Obama said in a statement.
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According to CNN, Obama also criticized Congress for not passing his early $447 billion jobs bill during the stop in Colorado to discuss the changes. He urged the young crowd to support him in getting Congress to have a "sense of urgency" in helping the ailing economy.
"Some of these folks in Washington still aren't getting the message. I need your voices heard," he said, according to the Los Angeles Times. "Young people, I need you guys involved; I need you active."
The current plan for borrowers enrolled in income-based payment calls for 15 percent of discretionary income to be paid for 25 years before having their debt forgiven, The New York Times reports. In Obama’s new plan, all remaining debt will be forgiven after 20 years.
The “pay as you earn” program will start in January, two years before the plan was due to be enacted under federal law.
The Washington Post reports:
Yet it remains unclear how many people will take advantage of the offer--even with the economy lagging and college tuition prices continuing to rise. Since 2007, borrowers have been allowed to cap federal student loan repayments at 15 percent of discretionary income. But White House officials acknowledged that just 450,000 of the nation’s 36 million student loan borrowers are participating in the income-based repayment program.
According to the Federal Reserve Bank of New York, Americans’ student loan debt surpasses outstanding credit card debt, and “total loans outstanding are slated to exceed $1 trillion this year.”
CNN reports that average student loan debt at four-year colleges was $24,000 for the graduating class of 2009. That data, from the Institute for College Access & Success, includes all private and federal loans.
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The topic of student loans has also become a contentious political issue for Obama and presidential nominees. Many of the Occupy Wall Street protests in the U.S. have said increasing debt for college graduates is something that needs to be fixed, according to the Washington Post.
DISCUSSION: Would you be affected by Obama's student loan forgiveness plan? Tell us how student loans have impacted your life and your views on the plan. We will republish a selection of the comments.