Obama proposes student debt reduction plan
Outside of mortgages, college student loans are the No. 1 source of household debt, experts say. President
Barack Obama announced a plan last week to reduce the nation’s $490 billion federal student loan debt.
The national level of student loan debt is about $1 trillion – with $490 billion from federal loans.
Some locally said the plan will help, but others are wary as the cost of tuition at public colleges continues to rise steadily.
Even at Palomar, students have seen an increase in tuition. From last semester, tuition was raised by $10, effective at the beginning of the fall semester.
Nationally, in-state tuition and fees have risen more than 8 percent from a year ago, increasing by another $631 this fall, according to a report from College Board, a non-profit organization. Add in room and board, and the average list price for a state school now runs more than $17,000 a year, according to College Board.
The increase in tuition comes at the same time universities are facing decreased appropriations on the state level. State appropriations to higher education declined 18 percent per student over the last three years, the College Board found, the sharpest fall on record.
“Somewhere, somehow, education needs to be a priority otherwise we will have no future professors or be able to continue with advancements in health and technology,” Murphy said.
Millions of student loan borrowers will be eligible to lower payments and consolidate loans under
Obama’s “Pay As You Earn” plan. By 2012, Obama is aiming to accelerate a measure passed by Congress to reduce monthly payments from 15 percent of discretionary income annually to 10 percent; forgive remaining debt after 20 years, instead of 25; and consolidate loans from both the Family Education Loan Program and direct loans from the government into one loan, according to the White House.
“We have to remember that this is all based on income and is very individualized,” Director of Enrollment
Services Herman Lee said.
“It will depend on student income level for details of their eligibility.” Lee added that we need to keep in mind that this is a proposed plan and all the details have not yet been worked out. There could be a lot of changes made. There will most likely be an application process and it would have to be determined who is eligible, according to Lee. Other critiques ask why taxpayers who did not go to college should have to pay off the debt of students who attended school.
Josh Carpenter of Hamilton, a recent graduate of Miami, said he’s facing about $60,000 in student loan debt. He said there is a benefit in Obama’s plan to help students but he is concerned only those currently in school will be eligible. “
The current plan missed the mark when the president’s plan failed to provide relief to those of us who are actually working instead of those who are not working, but are expected to work in the future.” The Associated Press contributed to this report.
“It is very individualized and whether it is going to help students, I don’t know, but it should help a little bit,” Lee said.