President Obama today offered the nation a package designed to “reverse the overall erosion in middle class security.” According to an article in the New York Times, this includes:
A cap on federal loan payments for recent college graduates at 10 percent of income above a basic living allowance, would cost taxpayers roughly $1 billion….. A pittance in a federal budget in which programs are often measured in tens if not hundreds of billions of dollars.
This is in preparation for Obama’s State of the Union Address on Wednesday.
In addition, an article at Miller-McCune magazine indicates that:
An income-based repayment plan for student loans began in July [2010] as part of 2007’s federal College Cost Reduction and Access Act. The monthly payment is adjusted annually, based on changes in income and family size. And to encourage careers in public service, it offers debt forgiveness after 10 years of both on-time payments and public or nonprofit sector work.
The average college graduate holds an estimated $23,200 worth of student loans, according to the Project on Student Debt. The new Obama initiative and the College Cost Reduction and Access Act only apply to federal loans. Private loans account for almost 25 percent of student debt. “A pittance” all of this may be, but at least policymakers are paying attention.
