by Steven Dixon
Advertising director
It was announced nationally on Wednesday, Oct. 26 that President Barrack Obama used executive power to begin new steps aimed at easing the burden of debt on students who have been, and will be, struggling to repay their federal college loans.
According to USATODAY.com, the amount of student loans taken out last year crossed the $100 billion mark for the first time, and this year total loans outstanding will exceed $1 trillion for the first time.
Reports from the Federal Reserve Bank of New York and the U.S. Department of Education show that Americans now owe more on student loans than on credit cards.
According to politicalhotsheet.com, Obama was speaking to a crowd of college students in Denver, Colo. as he outlined the new “Pay As You Earn” plan.
Under the original plan, approved by Congress in 2010, borrowers are able to decrease their monthly payments from 15 to 10 percent of their income as of 2014.
The president’s new order makes those benefits available as early as 2012. It also reduces the loan forgiveness timeframe from 25 years to 20 years.
So, what do these savings amount to for students and the nation? According to cbs.com, someone who makes $30,000 and has a student loan debt in the neighborhood of $25,000 will save approximately $60 a month under the new order.
This calculation is reached by taking 10 percent of the difference between your AGI (adjusted gross income) and 150 percent of the government’s pre-set poverty line of $10,890 then divided by 12. Which leaves tax payers to pickup unpaid loans.
Although many would be in favor of any such plan that would save them money, some are against it.
According to thinkprogress.org, Republican candidate Michele Bachmann cited the decision as an “abuse of power” and a “moral hazard.”
Bachmann stated, “There is a morality in keeping our financial promises, and I don’t think we should push that off onto the taxpayer, the individual needs to repay and be responsible for repaying their student loan debt.”
For those who recently graduated or are soon to graduate, refer to Financial Aid about IBR, or income-based repayment.
IBR will adjust monthly loan repayments based accordingly on annual income amounts.
On www.law.com, recent figures show that only 450,000 graduates have signed up for this option, although millions of students qualify.
According to SE Financial Aid, it is not currently known how many students implement or qualify for IBR on the campus.
Four options are given on studentaid.ed.gov for a student’s exit counseling on student loans, so the IBR option can often be missed, according to SE Financial Aid.