President Barack Obama is pushing for college students to be more aware of, and have easier access to, income-based repayment of student loans.
In a presidential memorandum issued Thursday, Obama directed Secretary of Education Arne Duncan to streamline the process for income-based repayment plans and improve Internet resources for loan repayment options and debt management services.
The memorandum states that the income-based repayment plan for federal loans currently caps student loan payments at 15 percent of former students’ current discretionary income, and the cap is set to lower to 10 percent in 2014.
“More individuals than ever before are using student loans to finance college,” Obama states in the memorandum. “While a college education remains an excellent investment, this debt can be overly burdensome, especially for recent graduates during the first few years of their careers.”
The memorandum directs Duncan and Commissioner of Internal Revenue Douglas Shulman to streamline the online application process for the payment plan that allows student loan borrowers with federal loans to import their Internal Revenue Service income data directly into the application. Currently, borrowers must first contact their loan servicers before applying.
According to the memorandum, the average student debt after leaving college is $26,300. UC spokesperson Dianne Klein said in an email that the average debt for graduates across the university is about $17,000.
In addition, the memorandum directs Duncan to ensure that information and notifications about the plan be made easily accessible on the Internet, even when accessed from mobile devices.
“People need help, they want clear answers and they want good information, and we’re absolutely committed to providing them with that,” Duncan said in a Wednesday conference call.
During the conference call, Director of the White House Domestic Policy Council Cecilia Munoz said that while Obama administration is working to improve higher education across the nation, individual states and colleges must also do their parts to ensure students can receive affordable educations.
“Even in a dire fiscal environment like this, states can not simply cut their higher education budgets to balance their budgets and expect institutions to make up the difference by raising tuition,” Munoz said. “Colleges have to also act with creativity and urgency to contain costs, and they must hold themselves accountable for ensuring that students get an education that prepares them for success in the workplace.”
Klein said in the email that UC students generally borrow at manageable levels and have strong job prospects after graduation, reducing the need for income-based repayment plans.
“We support the President’s effort to help students learn about — and take advantage of — the Income-Based Repayment plan (IBR) for federal student loans,” Klein said in the email. “IBR can make loan repayment more manageable for students in jobs with lower salaries, or for students with particularly high levels of student debt.”
Although UC campuses already make borrowers aware of income-based repayment plans, the sign-up process is currently complicated and too dependent on the individual companies that service the loans, according to Klein.
“The President’s proposal would provide students with better information about IBR and, more importantly, make it easier for students to get into the program,” Klein said in the email.