Obama Outlines Plan to Help Students With Their Student Loans

October 27 00:00 2011

New York, October 27 (RainbowNewsLine.com) – President Barrack Obama, while addressing thousands of enthusiastic college students on Wednesday, rolled out plans to help them with their student loans. He announced executive action to help struggling homeowners, veterans and students. Obama plans to tackle student loans, that are the second highest source of household debt, by providing some relief to millions of young people and save them hundreds of dollars a month in payments.

Obama said that it took him ten years to repay the $120,000 in law school debt that he and his wife, Michelle Obama had taken. Amid cheers from the students he said, “I’ve been in your shoes. We did not come from a wealthy family,”

He said that his plan will accelerate the process of reducing the maximum required payment on student loans from 15% of discretionary income annually to 10%, a measure that has already been passed by Congress. Moreover, the remaining debt will be forgiven after 20 years, instead of 25. About 1.6 million borrowers will benefit from this measure which will be put into effect in 2012, instead of 2014.

Obama’s plan will also help borrowers to consolidate direct loans from the government and loans from the Federal Family Education Loan Program. The advantage to students will be that the consolidated loan would carry an interest rate of up to a half percentage point less than before, benefitting 5.8 million borrowers. There will be no additional cost to taxpayers.