President Obama unveiled a three-pronged plan to ease student loan debts during his speech at CU-Denver on Wednesday, which may affect the 18,480 students at CSU, who receive financial assistance.
â€œHeâ€™s had a lot of good plans on education,â€ said Terran Hause, a CSU freshman political science and economics double major who heads the presidentâ€™s reelection effort on campus. â€œThatâ€™s why Iâ€™ve liked him from the start.â€
The announcement was made amid an increasingly worsening student loan debt situation. Ten years ago, one-third of individuals took out loans to pay for college and graduated with an average of $10,000 in debt. Now, two-thirds of students take out college loans and graduate owing about $24,000.
Student loan debt will also exceed $1 trillion in all this year. The Federal Reserve Bank of New York stated that Americans now owe more on student loans than on credit cards.
â€œYou graduate with a diploma in one hand and debt in the other,â€ said Rich Williams, a higher education advocate for the Colorado Public Interest Research Group (PIRG). â€œIt puts serious hurdles in front of life decisions that students make.â€
However, not everyone is convinced this plan will be effective in solving the student debt problem.
â€œWhen you get the government involved in lending programs, it devalues those programs,â€ said Alex Higgins, the CSU College Republicans president and chair of the Rocky Mountain Student Media Corporation Board of Directors. â€œIf colleges see more demand for loans, they may raise their tuition more, which I donâ€™t think is what Obama wants.â€
Described by PIRG as a series of initiatives that will reduce the burden of student loan debt that millions experience after graduation, the plan is composed of three parts.
First among them deals with the Income Based Repayment (IBR) system â€“â€“ a program created in 2007 to allow borrowers to repay their loans as a portion of their salary and help manage their debt after graduation. Under IBR, people pay 15 percent of their discretionary income in monthly loan payments. The program changed in 2010, allowing people to cap their paycheck deduction at 10 percent.
But the change will only affect loans taken out after 2014, which the Obama Administration is trying to accelerate to 2012.
A five percent change is enough for Mel Amoroso, a CSU freshman journalism and international studies major saddled with $3,000 to $4,000 in student loans.
â€œAt this point, anything helps,â€ she said. â€œThe fact that someone is trying to change it is a good thing.â€
The 22-year-old said she put off the idea of higher education precisely because it was so expensive. Waiting a few years meant that she could apply for financial aid as someone who was independent of her parents, resulting in a higher monetary award.
â€œWhen I graduated high school, I had every intention of going to college,â€ she said. â€œI couldnâ€™t afford it, and my parents couldnâ€™t afford it, so I had to wait for three years.â€
Obamaâ€™s plan also consolidates your private and federal loan statements into one form, which Amoroso predicts will also help her situation.
â€œYouâ€™d probably end up paying a little bit less since youâ€™re not going through two or three different lenders,â€ she said.
The third aspect of the presidentâ€™s three-pronged approach to easing student loan debt comes in the form of rewording financial aid documents so that they make more sense.
To Hause, the new policy is welcome news. He received enough scholarships to cover his first-year expenses at CSU, but said heâ€™ll have to take out student loans and incur debt to fund the remainder of his education at the university.
â€œI would be pretty new to (student loans),â€ he said. â€œI feel like others would help me navigate around any complications I might have, but unfortunately, not everyone has access to that â€¦ So much of it is complicated.â€
Amoroso agrees.â€œItâ€™s not impossible to understand, but they do have their own jargon to it.
That would be a very good idea for a lot of people. I think a lot of kids are intimidated by how difficult it is to understand,â€ she said. â€œTo have it clear and simple would be good.â€
Senior Reporter Andrew Carrera can be reached at email@example.com.
1. Lowers the percentage deducted from your paycheck to pay back student loans.
2. Consolidates your private and federal loan statements into one form.
3. Increases financial literacy through rewording financial aid documents.