White House Announces Plan to Ease Student Loans

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White House officials announced a new presidential initiative aimed at reducing the burden of student loans, which have overtaken credit cards as the nation's largest source of debt.

Domestic Policy Council Director Melody Barnes and Education Secretary Arne Duncan held a conference call with reporters late Tuesday afternoon to discuss the proposal, which calls for allowing borrowers with two kinds of student loans -- publicly-issued direct loans and privately-issued Federal Family Education Loans -- to consolidate their debts into a single government-backed loan, and to lower their interest rates, beginning in January. Barnes said that 5.8 million people, many of whom are struggling to make their payments, could qualify for consolidation and rate reduction.

In addition, President Obama -- who, Barnes noted, spent 10 years paying off his own student loans -- wants to accelerate the so-called "Pay As You Earn" policy. Passed last year, that law lets borrowers reduce their monthly student loan payments to 10% of their discretionary income, starting in 2014. Under the new plan borrowers can start doing this in 2012. After 20 years of payments, the balance of their debt would be forgiven; the previous term was 25 years. An estimated 1.6 million college students could be affected.

According to a White House statement, "The announcement is part of a series of executive actions to put Americans back to work and strengthen the economy, because we can't wait for congressional Republicans to act." When asked how the new measures might help to create jobs, the White House officials were unable to articulate a clear connection. Barnes spoke of allowing people to pursue socially valuable, lower-income positions, such as teaching or public service, and to start families earlier. But neither she nor Duncan took the opportunity to claim that reduced monthly payments by borrowers would act as an economic stimulus by increasing consumption.

The plan offers no relief for borrowers who have already gone into default on their student loans.

Duncan directed current students and borrowers to call (800) 4FED-AID, or visit studentaid.ed.gov, to learn more.

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michelebachmann8

HELP ME TEA TARDS!!!!!!!!!!!!!!!!!!!!...........IM FALLING IN THE POLLS AND I CAN'T GET BACK UP!!!!!!!!......MY CAMPAIGN STAFF ARE EVEN LEAVING!!!!!......I HEARD TODAY US TEA TARDS HAVE A ONLY 9% APPROVAL RATING IN CONGRESS.......I HEARD SCOTT WALKER IS ON THE VERGE OF A RECALL ELECTION.......POOR SCOTTY......I ALSO HEARD THE WALL STREET PROTESTERS HAVE A HIGHER APPROVAL RATING THAN US TEA TARDS.......OH WELL..............HAPPY BIRTHDAY ELVIS!!!!!!!!!!!!!!!!!!

October 26 2011 at 10:33 PM Report abuse -1 rate up rate down Reply
savemycountry911

Vote for me 'cause I'm your friend.
I'll try that Social-ism again.
I'll spend until we're out of debt.
Then I'll spend some more, you bet.
I am just a spending fool.
Vote for me 'cause idiots rule.

October 26 2011 at 8:24 PM Report abuse +1 rate up rate down Reply
savemycountry911

Students say gimme, gimme, gimme, gimme and Obama does. He is buying votes.

October 26 2011 at 8:22 PM Report abuse +1 rate up rate down Reply
sitemfg

Dictator Obama signed another executive bill. The hell with 3 branches of government.

October 26 2011 at 4:07 PM Report abuse +2 rate up rate down Reply
David

Kind of like the taxpayer funded "loan" to Solyndra to secure his huge campaign contributions, now Mr. Obama is going to make it easier for students to default on their loans of taxpayers' money in order to get their votes. This one is quite transparent..

October 26 2011 at 4:06 PM Report abuse rate up rate down Reply
rrpatreilly

Why isn't obama working 24/7 on creating an environment where business can flourish, grow and hire? Why is his latest "jobs" bill just another tax bill? Why do the republican candidates have job creating plans that actually focus on creating jobs and obama does not? Why is all this wall street crap going on? Is it to take our minds off the real problems government is causing? Sure seems that the media is filling the air with a bunch of extraneous stuff allowing this administration to skate freely away from the problems of our economy and high unemployment.

October 26 2011 at 3:32 PM Report abuse -1 rate up rate down Reply
1 reply to rrpatreilly's comment
groininjurybad

Obama has an agenda : Burying what's left of Capitalism in America.

October 26 2011 at 4:08 PM Report abuse rate up rate down Reply
csmjwoody

There is no direct relation to jobs because of this type of action. It is a Bullshit way for this guy to buy votes to try to get re-elected so he can continue to screw this nation and it's people. I suppose those too far to the left will thank him for it but those of us who are in the Moderate position see right through him. He can't wait for the Republicans to act is an understatement. What he really means is he can't allow the Congress and Senate to take on the task and do it the way the law requres it to be done. More of his Stimulus, entitle bullshit !!

October 26 2011 at 2:56 PM Report abuse rate up rate down Reply
joey

First he has collection companys ok'd to call their cell phones for payment and now he wants to buy a vote ...Its time we the people say BUH BUH BYE TO NOBAMA 2012...The younger voters are not STUPID!!!!!!OBAMA,,,,,,,,,,,,,

October 26 2011 at 2:34 PM Report abuse rate up rate down Reply
groininjurybad

Obama and leadership should not be used in the same sentence.

October 26 2011 at 2:32 PM Report abuse +2 rate up rate down Reply
kolia

thank you very much pres.barack hussein obama. young americans will benefit from your executive policies. i hope that you continue to use your leadership and resolve against the gop/teabaggers that are up to lies,dceceit and nop good politics against your since the day you got elected in 2008 by the majority of american people. your wise and determined will pays big rewards and your re-election on 2012 is unstoppable. thank you

October 26 2011 at 2:15 PM Report abuse -2 rate up rate down Reply
3 replies to kolia's comment