While many student activists praise President Obama’s recently announced policy on education debt, which will allow college graduates to limit student loan payments to ten percent of their income and will forgive student loans after two decades, not everyone is ready to offer praise.
According to a piece by Jamaal Abdul-Alim at Diverse Issues in Higher Education:
“It’s hard to figure out how this will work because it’s dependent on students themselves and the circumstance they’re in,” said Alisa Cunningham, Vice President of Research and Programs at the Institute for Higher Education Policy (IHEP).
Under the proposed rule, only students who took out loans in 2008 or later, and then who also take out loans in 2012 or later, will be eligible, said Sara Gast, a spokesperson for the U.S. Department of Education.
When asked for the rationale behind the eligibility requirements, Gast said it was “in order to catch a lot of borrowers who went to school during the hardest economic period and now are trying to find jobs.”
That’s important to note. Not all borrowers will see major changes, or even any at all.
Still, to address Cunningham’s statement, it’s not really that hard to see how this will work out. Many graduates will be able to reduce their monthly student loans payments. That will give them more money. It’s unlikely to have any particularly transformative effect on society beyond that, which is probably about appropriate.
The United States has been financing higher education through student debt for decades. With the recent economic downtown many have been struggling to make payments on student loans. The policy change will help address this problem. It also won’t cost taxpayers anything. This seems to make a lot of sense.