Obama's New Aims to Ease Student Loan Debt
Tomorrow, President Obama will announce three major initiatives that will reduce the burden of student loan debt that millions experience after graduation.
First of the series is an effort to better educate students about Income Based Repayment (IBR), a program that allows borrowers to repay their loans as a portion of their salary. The President will propose a gap measure to accelerate the start of the discretionary income cap for some student loan borrowers in 2012. This benefit would be available for those who have borrowed a federal student loan since 2008 and have another loan starting in 2012.
Obama will also announce a loan consolidation initiative to make it easier for borrowers with multiple loans to pay their bills and avoid default. The benefit will apply to student borrowers with both a loan from the Department of Education and a loan through the discontinued Federal Family Education Loan program – a group of borrowers who are more likely to default.
Third, the Administration is rolling out changes to improve financial literacy tools for students before they enter college. The Department of Education will partner with the Consumer Financial Protection Bureau to tailor a model financial aid form that will allow students to better understand college costs, including loan debt and repayment. Such financial aid reform will help students and families better understand the cost of college for them, school by school. The comparisons will make the college application process just a little bit easier.
With student debt levels skyrocketing, many advocates are feeling positive about these new initiatives. “Student debt levels have skyrocketed. Hundreds of thousands of student loan borrowers wear a financial straightjacket once repayment begins. Tools exist to help borrowers break free from negative consequences like default but they aren’t aware that these tools exist and they need the tools sooner,” says U.S. PIRG Higher Education representative Rich Williams in a U.S. Pirg statement.
What are your thoughts? As the administration announces and rolls out these changes to financial aid and student loans, we are curious how those of you experiencing, advocating for, or aware of the enormity of student debt are reacting to these new initiatives. Leave a comment below, or write a blog, record a video, or do whatever you want to share your voice--and send your reactions to email@example.com.