Last week, President Obama announced a new education plan that includes the re-payment of student loans.
PR Web reported that on November 3, the President revealed a new plan that would help millions of people who are struggling to pay back their student loans. The plan will speed up legislation passed by Congress last year and reduce the maximum required monthly payment on student loans.
Right now students may have to pay up to 15 percent of their discretionary annual income. With Obama’s new plan, the maximum payment will be 10 percent of discretionary annual income. Along with this, at this time there is debt forgiveness after a period of 25 years. Under the new plan the forgiveness time will be 20 years.
According to the Christian Science Monitor, the plan allows some 1.6 million students to cap their loan payments at 10 percent of their discretionary income in 2012. The same goes for the debt forgiveness time.
Obama’s new plan is not widely known among Salt Lake Community College students, though it will affect them directly. Opinions vary about the plan amongst students aware of it.
“For somebody that has a lot of student loans, this will be beneficial,” said Cooper Hoffmeister, a communication and pre-med student. “This will be beneficial to help encourage young people to go to college.”
“I think it makes it easier to procrastinate on your loans, but it’s better to give people relief with smaller payments,” said Jeff Coombs, who is studying film production.
President Obama made the announcement in front of a group of students in Denver, Colorado.
“Higher education is essential to competing in the global economy,” he told the students.
“We want you in school,” he said. “But we shouldn’t saddle you with debt when you’re starting off.”
The rules, which will take effect next year, will allow students to roll different loans into one overall package with a lower interest rate. President Obama said that 1.6 million students could see debt payments go down hundreds of dollars a month as they pursue their college educations.
“It’s (education) never been more important, but let’s face it, it’s also never been more expensive,” he said.
“Know before you owe so you have all the information you need to make your own decisions about how to pay for college,” he said.