As the price of an education grows steeper across the nation, so too has the burden of student loans. Student debt will surpass a staggering $1 trillion this year, meaning total student loan debt will be greater than the credit card debt in the United States. Something must change.
Though it is not comprehensive, President Barack Obama’s plan to ease the weight of federal student loans is a stepping stone along the path toward reducing the pain of such exorbitant costs.
While Congress passed reform to the income-based repayment system last year, which would have begun in 2014, the White House revealed Tuesday that the plan has been moved up to be implemented next year. New borrowers would only have to pay 10 percent of their discretionary income for at most 20 years under the reform. The current system requires 15 percent at minimum of discretionary income to be paid with a cap at 25 years.
The plan also allows those with different kinds of federal loans to consolidate these loans and get a half-percent cut in interest. This could aid 5.8 million borrowers.
We applaud Obama’s plan because it will benefit millions of college graduates who need a reprieve from burdensome loans.
Still, the plan does not fully address the problems plaguing graduates. Not only do these new measures leave out many former students (for example, those with loans from 2007 or earlier will not be eligible for the new income-based repayment program), but the plan also leaves another major obstacle for borrowers unchecked: paying off private loans. Loans from private sources — typically banks — do not offer the same protections as federal ones and generally have higher interest rates. Thus, the plan excludes those who remain vulnerable to the whims of private lenders.
While we are glad that Obama is taking steps to address the encumbrance of student loans, more must be done to ensure financial stability for our nation’s posterity.
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