President Barack Obama will address the growing student loan crisis tomorrow, unveiling a plan to allow people to reduce interest rates by consolidating their debts into one government loan.White House Education Secretary Arne Duncan and Domestic Policy Council Director Melody Barnes outlined key provisions of the plan this afternoon, previewing the President’s formal rollout in Denver tomorrow. This is the final initiative of the President’s “We Can’t Wait” executive economic plan, which emphasises economic policies the White House can take without Congressional approval.
But the plan basically builds on, or speeds up, measures that have already been passed by Congress, and underscores the limits to what the White House can accomplish with an executive mandate.
Here are the two key provisions:
- People who hold both government-backed private sector student loans and direct loans issued by the government will be able to consolidate those debts in one government-backed loan, thereby lowering interest rates and reducing monthly payments. The administration estimates this will affect about 5.8 million people.
- The plan will accelerate income-based payment programs already passed by Congress, which allow college graduates to cap their payments at 10% of their income, rather than the existing 15% cap. Under Obama’s executive rollout, the new cap, originally scheduled to take effect in 2014, will take effect in 2013 for an estimated 1.6 million students and recent graduates.
Rather than a game-changing policy proposal, the student loan initiative appears to primarily be an attempt to reach out to young, educated voters, a key constituency for Obama’s 2008 campaign who now form the core of the Occupy Wall Street movement. Student loan debt — which now totals nearly $1 trillion — is one of the key concerns outlined by this growing cadre of disaffected — and unemployed — youth activists.
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