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    October 26, 2011

Obama Announces Changes to Ease Student Loan Burdens

   Dan Robinson | White House
   President Barack Obama outlines a plan to allow millions of student
   loan recipients to lower their payments and consolidate their loans to
   students and faculty at Auraria Events Center in Denver, October 26,
   2011.
   Photo: AP
   President Barack Obama outlines a plan to allow millions of student
   loan recipients to lower their payments and consolidate their loans to
   students and faculty at Auraria Events Center in Denver, October 26,
   2011.

   President Barack Obama announced Wednesday steps aimed at making it
   easier for U.S. college students to pay off their education loans. In
   announcing the actions, the president pointed to a new report detailing
   the continuing rise in the cost of higher education in the United
   States.
   In his remarks at the University of Colorado at Denver, the president
   used a personal example and some humor to illustrate the pressures that
   sharply rising education costs place on Americans.
   The president recalled the burden that he and his wife Michelle
   struggled with in paying off about $120,000 in student loans after they
   graduated from law school.
   "We combined and got poorer together. We combined our liabilities not
   our assets. So we were paying more on our student loans than we paid on
   our mortgage each month," he said.
   Obama pointed to a new report from the College Board showing that the
   average tuition at private colleges in the United States went up by
   more than 4 percent - 8.3 percent at four-year public colleges - during
   the past year. That's faster than inflation and income growth.
   One step the president announced will allow college graduates enrolled
   in an existing government program to pay back student loans at a
   maximum rate equal to 10 percent of their disposable income, rather
   than 15 percent, and be eligible for debt forgiveness on their
   remaining debt in 20 years instead of 25.
   Another rule change would help students consolidate multiple loans into
   one federally-backed loan at a lower interest rate, allowing them to
   save more money.
   Obama said this will potentially help 1.6 million students and
   graduates, provide students with more certainty, and help boost the
   economy.
   "Because you will have some certainty, knowing that is only a certain
   percentage of your income that is going to pay off your student loans,
   that means you will be more confident and comfortable to buy a house or
   save for retirement. And that will give our economy a boost when it
   desperately needs it," said the president.
   Secretary of Education Arne Duncan said the changes will help students
   and graduates in the current difficult economic environment.
   "These are changes that will make a big difference in the lives of
   college students as well as recent graduates, who are entering one of
   the toughest job markets in recent memory," said Duncan.
   But critics note that the changes will affect a fraction of those who
   have borrowed to pay for their education, will apply only to federal
   college loans, and that current borrowers would not be eligible for
   adjustments.
   The changes are the third in a series of executive orders President
   Obama is issuing that are designed to bypass opposition by Republicans
   in Congress to his economic and jobs proposals.
   "I intend to do everything in my power right now to act on behalf of
   the American people - with or without Congress," said Obama.
   Earlier this week, President Obama announced a plan to make it easier
   for Americans with federally-backed mortgages to refinance their home
   loans and save money, and another to encourage businesses to hire
   returning military veterans.
   Republican congressional leaders have responded to Obama's "we can't
   wait for Congress" campaign by accusing the Democratic-controlled U.S.
   Senate of blocking Republican bills they say would do more to help the
   economy.