Help is on the way for students burdened with loan debt.
It’s a benchmark that nobody is excited about reaching. By the end of the year, the total amount of college loan debt in the U.S. will near the $1 trillion mark. That’s according to FinAid, a web-based source of student financial aid information.
The president, speaking to students at the University of Colorado’s Denver Campus, announced a new proposal that would tackle the student loan crisis on two fronts. Starting in 2014, student loan payments will be reduced to 10 percent of a borrower’s discretionary income. Also, student borrowers will have the option of consolidating their federal student loans at lower interest rates.
Student loan debt is a familiar topic for the first family. President Obama told the audience that he and the first lady had a combined $120,000 in college loan debt when they graduated.
He said, “Look, obviously we were lucky to have gotten a great education and we were able to land good jobs with a steady income. But it still took us almost 10 years to finally pay off all our student debt. And that wasn’t easy.”
The non-profit group, The Institute for College Access and Success estimates that seniors graduating in 2009 carried about $24,000 in student loan debt, a six percent increase from 2008.
“We want you in school. But we shouldn’t saddle you with debt when you’re starting off,” Obama said.
Graduating senior Christina Santiago is bracing for the time when those student loan bills start pouring in. The American University student said, “My parents don’t help me financially at all and it’s stressful knowing that I’ll have to pay off all my loans. Going to college is difficult enough, especially if you’re already financially disadvantaged.”
With an employment picture that is already bleak, student loan debt adds another barrier. Marissa Moncrieffe, a graduating senior at Sienna College in Albany New York, is constantly worried about paying back nearly $15,000 in loans. She said, “I’m thinking about grad school so when I consider the cost of that, plus my school loans, plus paying my bills, it can be burdensome.”
The new changes will go into effect next year and, according to the White House, could help 1.6 million Americans see their payments decrease by hundreds of dollars a month.
“So these changes will make a difference for millions of Americans. It will save you money. It will help more young people figure out how to afford college. It can put more money in your pocket once you graduate,” said Obama.
Santiago believes the proposals will lure more students onto college campuses. “A lot of times people don’t go to college because they don’t know how to pay for it, so this would push them to make the step,” she said.
(Photo: JEWEL SAMAD/AFP/Getty Images)