We Can’t Wait to Help America’s Graduates

Cross-posted from the White House Blog.

In this globally competitive, knowledge-based economy, higher education has never been more important. Simply put, America cannot lead in the 21st century without the best educated, most competitive workforce in the world. Nations that out-educate us today will out-compete us tomorrow, which is why some form of higher education is an absolute must.

We also know that college costs have never been higher — or more difficult to manage. The Administration has already provided aid to millions of students with historic investments in programs like Pell Grants and the American Opportunity Tax Credit. But we realize that many borrowers are struggling to both pay off their loans and make ends meet every month. And fear of being saddled with debt in the long run may deter many potential students from enrolling in college. They need help now.

That’s why today, President Obama announced new efforts to make college more affordable by helping millions of borrowers better manage their federal student loan debt. We’re taking executive action with two measures that will bring relief to borrowers by lowering their monthly loan payments — at no cost to taxpayers.

First, for some students we are proposing to cap student loan repayment at 10 percent of a borrower’s discretionary income, starting next year. For many who worry about managing their debt while working in lower-paying fields — including teachers, nurses, public defenders, and social workers — this could reduce their payments by hundreds each month.

We also want to provide immediate relief to borrowers already repaying their loans. While the pay-as-you-earn proposal would only apply to some current students and recent graduates, millions more borrowers may already be eligible for our current income-based repayment plan, which caps payments at 15 percent of a borrower’s discretionary income. We know there are folks who are struggling in repayment now — and for them the current Income Based Repayment (IBR) plan may be a great option. To learn more about this plan to see if it makes sense for you, visit www.studentaid.ed.gov/ibr.

Second, beginning in January we will offer 6 million borrowers the chance to consolidate their loans and reduce their interest rates. Currently, these borrowers are repaying loans from two different programs, requiring them to submit separate payments and adding red tape that makes them more likely to default. Our special consolidation plan will allow these borrowers to make a single payment each month, with incentives to encourage on-time repayment. Borrowers who take advantage of this option will be eligible to receive a reduction in the interest rate on some of their loans by up to 0.5 percent, lowering their monthly payments and saving hundreds in interest. We will start reaching out to eligible borrowers in early 2012 to introduce them to this program.

In addition to these steps, the Consumer Financial Protection Bureau and the U.S. Department of Education have teamed up to launch a new Know Before You Owe project, and today they are releasing a Financial Aid Shopping Sheet — a draft model financial aid disclosure form. This form is a tool that colleges can use to help students better understand the type and amount of aid they qualify for, and will allow potential students to easily compare aid packages offered by different institutions.

The form will also make the total costs — and risks — of a student’s loans clear before enrollment, by outlining what a student’s monthly loan payment would be and providing an estimate of their total loan debt. Ultimately, this provides students and their families with useful information that can help them make a more informed decision about where to attend college and better understand the debt burden they may be left with.

These are changes that will make a big difference in the lives of college students and recent graduates entering one of the toughest job markets in recent memory. We’re helping provide them with key information on the front end, and we have a way to help them save money by consolidating their debt and capping their loan payments. And all of this will be done at no cost to taxpayers. This is not just a no-brainer – it’s the right thing to do.

Arne Duncan is the U.S. Secretary of Education and Melody Barnes is the Director of the White House Domestic Policy Council 


  1. I am studying abroad in Brazil at the current moment. I am finishing my undergraduate program this semester and am enthused to repay the $25,000 that was a necessity in my situation in order to take advantage of a “higher education.” True, the amount I am going to repay is insignificant in comparison to others, but I urge all of those who have to take out these loans to ask this simple question until the truth is revealed: why? Now, the fundamental concern I have with the education here in the U.S. has already been mentioned: school TUITION prices for “public” universities is absurdly high and is rising. In a truly democratic society there would be no competition between a “public” university and a “private” university considering that all citizens have the right to “equal” opportunities to learn. There is no equality in this equation when “private” universities costing around $50,000 per year offers better quality education than “public” universities at around $5,000-10,000. Furthermore, the use of the word “public” in “public university” should be only permitable considering that the tuition, teachers, fees, etc. is actually FULLY paid for by public funds. Since when did the word “public” signify that there is a partial subsidy? I am currently studying at a public university here in Brazil called the Federal University of Bahia. It is free. The students are offered the best quality education (as private universities are inferior) that’s available and do not have student loan debt in the future. Lastly, who receives the money from the interest payments that I am paying? Are these individuals the lucky elite class that already have an excess of wealth that store millions of dollars in banks in order to receive my interest payments for the simple fact that they possess the money that was given to me? A society surely shows severe problems where one can call “possessing money” a job. This means that the core problem is the educational system that is designed to allow for more “jobs” like these to occurr. If the same individuals that make a living by possessing money were taxed the amount of money i am required to borrow to from them to continue to learn beyond a public highschool education and the government were to use this money to pay for these expenses – teachers, tuition, books – then there would be no interest at all. I certainly never thought that the outcome of this “higher education” that i have pursued would show me how horribly corrupt and mismanaged the education system is in the United States. But hey, that must be why it is so expensive and inaccessible to the “we the people.”

  2. Speaking of education, do those in your employ have any? myedaccount.com STILL doesn’t work? Do you expect it to be operational anytime in the next YEAR? Are you going to penalize those of us who are attempting to make payments, change our addresses or consolidate loans? Fix your problem and help us to fix ours! WHY does everything the Government touches fucntion at a substandard level?? My bank, my email, even my Facebook account has no problems with logging in!

  3. I agree higher education is critically important and Obama should give students with loans a break. We want to encourage our children ( and adult) to actively seek out higher education, so lets help them to achieve this.

  4. I would love the government or the head of Dept of Education to explain to those of us with students loans:

    Why is the interest so much higher for students/parents than what the government loans out to the banks at near zero interest when the government makes loans to students/parents at 5% to near 8%? The argument of ‘the interest is high for students because they have no collateral’ does not wash. Many of the failed banks and businesses such as GM were about to go out of business and the government stepped in to give them near zero interest or free money from our parents’ tax payments. Why ‘going out of business’ is a better collateral than students’ future earnings?

    Why do students loans get single out as a type of loans that cannot be discharged or negotiated in a bankruptcy? When the supreme court declares that corporations have the same rights as a person to allow for huge political donations, it raises this question – why can corporation’s loans be discharged yet students who are also ‘persons’ do not have the same rights?

    It is true that nobody is forcing these students/parents to take these loans. We only want to be treated fairly, especially when the government is making use of our parents’ tax payments to fund many of these failed banks or companies.

  5. Please do research. You would think with an education they at least taught you how to do that…White house press release states
    “Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option. Students can find out if they are currently eligible for IBR at http://www.studentaid.ed.gov/ibr. Last year, the President proposed, and Congress enacted, a plan to further ease student loan debt payment by lowering the IBR loan payment to 10 percent of income, and the forgiveness timeline to 20 years. This change is set to go into effect for all new borrowers after 2014—mostly impacting future college students.

    Today, the Administration is proposing to offer even more immediate relief to many current college students by giving them the chance to limit loan payments to 10 percent of their discretionary income starting in 2012. In addition, the debt would be forgiven after 20 years instead of 25, as current law allows. For many who struggle to manage their student loan debt – including teachers, nurses, public defenders and others in lower-paying jobs – these proposed changes could reduce their payments by hundreds of dollars each month. Overall, this proposal would provide an estimated 1.6 million borrowers with more manageable monthly payments.”

  6. This is incredibly disappointing. Once again, Duncan and Obama have overpromised. The speech and all of the headlines regarding this were geared towards “graduates,” people who have already finished college/grad school/law school, etc. Your plan only helps people who haven’t even taken out one federal loan yet. The only “relief” offered to current graduates is IBR, which many of us are already taking advantage of. Also, you did a horrible job with public education on this program and the message the press got really made it sound like this plan was for people who already graduated.

    As someone with a large student loan debt who cannot find meaningful work and has been working on a contract basis only, I am very upset with how this proposal was handled and publicized.

  7. My student debt is about 5 years old. I graduated and went to work and all seemed well until I was diagnosed with stage 3 lung cancer. I somehow survived the treatment for now, but it is 5 years before they even consider declaring you cured, and I may not be cured. Lung cancer has a high death rate. In the mean time, I now have a damaged lung, enlarged heart and pericardial fluid where I did not have before. I very much wanted to work again but no one will consider me now, and I would not get past the first job interview as my skill also requires that I pass a physical. I need help to reduce my interest rate and to consolidate. Sallie Mae is working with me allowing me to make interest only payments. But how long can this go on? I appreciate Mr. Obama’s executive efforts I believe he is sincere in wanting to help people, but I am wondering if this will help me with my government loans originally made through Sallie Mae?

    • I sincerely hope so. I am already sorry that I acquired my student loan from Sally Mae. That organization does not make any effort in assisting their borrowers to make affordable payments. Sally Mae refuses or are very reluctant
      to help clients with their home loans and student loans.

      My best to you and you are in my prayers.

  8. Can’t we come up with some other alternatives?? How about listening to the thousands of us overwhelmed with debt to arrive at some better solutions. As one recent graduate of higher education I will share that the school loan debt is overwhelming and getting worse everyday. I won’t even discuss living at home wiht my parents and trying to find a job. The facts of life. I did my homework, played tennis for the team, volunteered in the community, followed the lead of my role models and did what my parents told me to to do. Inspired by JFK’s words, I even joined the Peace Corps after earning my undergrad degree from Northwestern University in Journalism. I proudly joined the Peace Corps and served in Bolivia, South America. Great experience and I encourage all college grads to serious consider Peace Corps or volunteer service before entering the work world. I returned home after 31 months inspired with a belief that I could actually make a difference in the world and went to law school in order to pursue a career in International Law and Human Rights Advocacy. Because that was another thing we were supposed to do. And it was a good thing. So I graduated with a law degree in 2009 and still want to make a difference in the world. But instead I am overwhelmed with debt that is my single biggest obstacle to making a contribution in society and also the single biggest burden on my life, my parents, my community, and my future. I have this debt now and forever. Give us some alternatives. I would gladly committ to work the next 5, 10 or 20 years in a job relevant to my field and/or public service in return for relief of my student loans right now. Invest in us now. Benefit from us now and even more in the future. Pay off our student loans now with a committment to public service or similar compromise. After that we work for the common good, gaining experience, and actually putting to use and improving on skills that could benefit many in society right now. Loan consolidation, income based repayment, public service loan forgiveness and lower interest rates are incentives to pursue higher education – but what I have learned is that we are too overwhelmed and losing our confidence, faith and ability to overcome challenges. This financial obstacle is significant and we need help. The advice many financial aid offices offer – “don’t get married….it increases your monthly payment.” My dog and I are looking forward to the next 20-30 years paying off my student loans, hopefully moving out of my parents house after securing a job with health insurance that I currently cannot afford.

    • The IBR program already offers what you are asking for. Have you checked it out? It offers total forgiveness after 10 years in public interest work.

    • you know shannon your comment really resonated with me because i, like you (and millions of others) recently graduated from college with thousands of dollars in debt (mine is in the $50k range). After I graduated I joined a very humbling and peaceful volunteer organization called the Lutheran Volunteer Corps (Shout out to the Wellstone House!) where I volunteered for a stipend of $100/month for a year working in South Minneapolis. The reason you ask? I had no job prospects and no income so I deferred my loans! But shortly after my return loans were due. I was blessed enough to find a decent paying job that allowed me to move out of the fam’s house and I was doing okay, until you guessed it, I was laid off. why when I lost my job the first thing i thought about was paying my loans back? higher education is to a degree conditioning us to constantly think about money. I will be paying back loans until 2030 at least! all this talk about making college more affordable for graduating hs seniors gets old. I like you did what i was supposed to do (and then some) and now I would like to be given a helping hand. I am working currently for a multi-cultural non-profit literacy organization exciting children about reading and literacy and helping to close the achievement gap (dont get me started on that..) why cant people like us doing good community-based work, do what we love and work down our loans while we do it?

  9. We should all just be responsible for our debts and pay ot back, not expecting Obama the false messiah to save us by using tax payer’s money.

    • While I agree that we should all be paying off our debts, I see the current move as being more about reducing the steep interest payments rather than forgiving the capital on the loans per se. Many students have loans the size of mortgages these days, and without some sort of interest-forgiveness, the loans would never get paid off. We recently estimated that under the new interest-based repayment plan, my wife will only pay about $150,000 on her $70,000 loans; without the interest-based repayment, the number would be a lot higher. It seems like $150K ought to be enough to clear her debt to society. (The number would be lower if she hadn’t already been paying on her loans for years before the IBR plan was announced, but it still would have exceeded the amount she borrowed.)

    • it won’t cost the tax payer’s anything, you should be more responsible and do your research before making comments

    • *It’s saving tax payers 2 billion dollars.

      **Congress already approved this in 2010 to take place in 2014. Obama is only expediting the plan to start in 2012.

      ***Since when is making payments NOT paying back loans?

  10. “That’s why today, President Obama announced new efforts to make college more affordable by helping millions of borrowers better manage their federal student loan debt.”

    Honestly, “making college more affordable” is not the same thing as helping borrowers better manage federal loan debt. Does this plan reduce the cost of going to college? No? Then it does not make college more affordable as it costs the same (or more as I read an article that college attendance costs rose 8.3% this year).

    Making college more affordable and making it easier to manage debt are both good goals, but let’s not mix apples and oranges here as it is disingenuous.

    I will welcome to reduced student loan payment. I will use it to save more money as I create my own personal unemployment insurance fund.

    I wish more people were eligible for interest rate reductions though. My undergrad loans were at 2.5%… not sure what happened the 5 years between undergrad and grad school that drove the rates up to 3x that.

  11. Soon the goverment will run out of money. I dont think China will be as forgiving . Debt is going to be the downfall of the usa. There are plenty of good jobs for grads who picked the right major. The Grads of today are going to pay a lot more for our stupid spending of the last 20 years.

  12. This is not going to help the private student loans. These private student loans are not discharged in bankruptcy and stay on your credit report making it impossible to obtain any new loans such as buying a home. I have more than 190,000 in federal student debt and more than $100,000 in private student loans debt. Not being able to pass the medical exam does not allow me to practice my career, so I am stuck with this huge debt for life.

  13. It won’t hurt to try the plan out. We should never give up, even though I am unemployed at this time with a Master of Arts degree. I was offered three education jobs overseas/globally – China, Japan, and Canada – (Arabic private school), but my heart is with America first. What about volunteer community service hours and working in inner cities of promise or rural communities At Risk; as a way to cash in on SL’s repayment? Keep hope alive. I feel a positive change is coming. God bless America.

  14. Jane- I can tell you this… There are programs the will get you out of default for zero payments. Just work with those many collection aencies to do and ICRP or consolidation. Then work with the Dept of ED to do an IBR program. Stop placing the blame and take ownership! Collection agencies recover millions of dollars a year so other kids can get help going to school. Amnesty or bailing you out is not the answer. Work hard to find a way out there is one if you work at it. Hope your not a 99 percenter too.

  15. While I applaud the effort, this is essentially half a loaf.

    What about cash-strapped and/or jobless or under-employed parents with parent plus loans who are struggling to make (any) payment right now?

  16. For many of us anchored with student loan debt this plan won’t work. My student loan debt is 20 years old. The interest owed is 4 times more than the original principle. I’ve had debt collectors hounding me on my phone for 16 years. Do you have any idea what it’s like to have debt collectors calling you at work harassing you for student loan debt from 1989-1992? I wasn’t able to use my graduate degree due to a physical disability. My $56k in debt is now over $225k with the interest. I will never be able to pay this money back in this lifetime. I will never collect Social Security because of this debt. I will never be able to retire because of this debt. The reason I went to graduate school was because I was injured in an automobile accident and I had back surgery. I was out of work for 3 years. Going back to school didn’t help me get a better job as I had hoped. What I need is Amnesty from the student loan nightmare that has haunted me for the past 20 years. President Obama, please give the people with student loan debt in excess of 20 years a break. Wipe our slate clean. Haven’t we been punished enough by the collection agencies? The economy would benefit from removing our student loan anchors. Amnesty for student loan debt if it’s 20 years old or more.

    • i agree with Jane statement: “President Obama, please give the people with student loan debt in excess of 20 years a break. Wipe our slate clean. Haven’t we been punished enough by the collection agencies? The economy would benefit from removing our student loan anchors. Amnesty for student loan debt if it’s 20 years old or more.”

      Also, is it true that you cannot collect Social Security because of this debt?

      P.S. I, and I know other students, who didn’t know exactly what they were getting into, who trusted and thought they were doing the right thing–now find themselves in a terrible position where we will never be able to pay this money back in this lifetime. Please help!

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