New student loan policy: Political move or simply helpful?

Maria Mauti, Staff Writer

In a packed gymnasium on Wednesday, Oct. 25, President Barack Obama broadcast to the nation his executive order that fundamentally changed the student loan repayment process for struggling students and future generations.

In front of 4,000 students, staff, faculty and community members at the Auraria Campus near downtown Colorado, President Obama announced, “Pay as You Earn.”

“Because of this change, about 1.6 million Americans can see their monthly payments go down by hundreds of dollars a month,” the president stated.

He also unveiled “Know Before You Owe,” which is a fact sheet that will simplify what the student owes and when.

“So you have all the information you need to make your own decisions on how to pay for college,” said Obama.

The order expedited the 2014 effective date, when the bill passed, to Jan. 2012.

An action the current administration took because of the current state of the economy.

“Our economy could use it right now and you could use it right now,” stated Obama.

So what has changed?

The first thing that has changed is the percentage of income a student is required to pay, or IBR (Income Based Rate). What was once 15 percent of a student’s income is now 10 percent.

The second thing that has changed is when a loan is forgiven. A student before this new policy had to wait 25 years for loan forgiveness. Now, loan forgiveness begins after 20 years, but before every student jumps for joy, there are only a limited number of students who are eligible for the program.

The program is only applicable to Federal Student loans. Parent or private loans are excluded. The other requirement is the student has to have taken out that federal loan after 2008 and originating a new loan in 2012 or later.

For the students who are fortunate enough to fit this strict criterion, they will enjoy more manageable monthly payments between jobs or during unemployment.

Publisher of FastWeb.com and FinAid.org, Mark Kantrowitz, offers alternative repayment strategies even if you don’t qualify for the new program.

“Graduates who are looking to get into the public service industry will reap some advantages when it comes to paying off their loans. Public service loan forgiveness applies to jobs such as public school teachers, police, fire, EMT, public defenders, prosecutors, government workers, members of the military and anybody who works for a 501(c)(3) organization,” Kantrowitz told NPR.

As helpful as this all is for some people, CNSNews.com reports it’s just not enough, claiming the root of the problem is the rising cost of college tuition.

RMU senior John Emrick does not believe the move was about students at all.

“I think Obama’s new student loan plan is a political charade in hopes to garnish support from young people with student debt,” he said.

RMU communication student Logan Williams also reacted with hesitation.

“When I heard that he expedited the process, I instantly thought he was using it as a political move,” stated Williams. “I think many people are going to think the underlying reasoning is that he is trying to get more votes. In reality, though, it will actually help a lot of people in the long run.”