President Obama’s new plan to ease the burden of student loans may give some hope to eligible Whitman students and thousands of other indebted college students nationwide. The plan will go into effect in January 2012, lowering monthly payments and allowing students to consolidate their federal loans.
Obama announced the initiatives on Oct. 25 in the wake of the Occupy protests that highlighted student debt as a significant issue for young voters. Student debt recently exceeded credit card debt to become the largest source of household debt in the country and is estimated to hit $1 trillion by 2015.
Obama’s administration plans to use executive authority to accelerate changes to the Income-Based Repayment program passed by Congress in 2010. These changes would limit monthly payments to 10 percent of the borrower’s discretionary income and decrease the time period for loan forgiveness from 25 years to 20 years. A separate initiative would allow eligible borrowers to consolidate their direct federal loans and government-backed private loans for a reduced interest rate.
Nearly six million students have loans nationwide, and almost 50 percent of currently enrolled Whitman students have taken out student loans.
According to Whitman’s Director of Financial Aid Marilyn Ponti, Obama’s initiatives will provide some help but don’t address more pressing concerns for students with loans, such as rapidly rising interest rates. The interest rates of subsidized Stafford loans are set to double in July 2012, rising from 3.4 percent to 6.8 percent.
“For current students who are taking loans, while it’s beneficial what [President Obama’s] doing, really what would be important is for them to take a look at the interest rates and help students,” Ponti said.
Whitman students with loans also expressed mixed feelings about the plan.
“I think the plan has good intentions and ultimately will help those struggling with student loan debt. Personally, I hope the measures don’t affect me much because I hope I’m not still in debt twenty years after I graduate,” said sophomore Paul Lemieux.
Senior Omar Ihmoda, co-president of Whitman’s First Generation and Working Class club, noted that the loan plan doesn’t necessarily solve the problem of rising student debt in the United States.
“It’s an improvement, obviously. It leads, at the very least, to less of a burden for someone who’s graduating. For the short term, that could help people, but at the same time there are deeper problems that I think are fueling the dissatisfaction with the whole system of student loans. I think this [plan] is just a way to appear to address that problem without really addressing the problem,” Ihmoda said.
Ponti encouraged students and their families to become more active in monitoring and urging action from the federal government in order to curtail increasing educational expenses.
“We should as a country be helping our students and not putting this huge burden on them as far as paying off their student loans. Legislators tell us they don’t hear from students, and they don’t hear from parents, and therefore they kind of do what they want. Our message needs to be [that] we’re not okay with this,” she said.
