Written By: Janah Stokes, Staff Writer
President Obama’s Student Loan Plan is set to help 1.6 million people save hundreds of dollars a month. According to a report by the College Board Advocacy & Policy Center, the average cost of tuition and fees at four-year institutions increased to 8.3 percent this year.
“Obama is trying to put a cap on student loan payments, basically when we get out of college it shouldn’t [Loan payments] be more than 10 percent from what we make,” said Amber Parker, a junior English major at Old Dominion University.
“I think it’s a good idea because depending on how many student loans, it’s going to determine how much you pay. Right when you get out of college, you have to pay and even with your degree, students will not be able to pay it.”
For many young people, that means greater loans and more debt around the time when it is hard to find a job right after graduation.
Parker went on to discuss what Obama discussed when he visited the University of Colorado.
“We should be doing everything we can to put college education within reach for every American,” said Parker when discussing Obama’s remarks.
According to a CNN post, “the president said the repayment amount of a federal student loan will be limited to 10 percent of discretionary income, and the timeline for that to kick in has been moved up to next year.”
The Federal Reserve Bank of New York has stated that American student loan debt surpasses outstanding credit card debt. Loans are expected to exceed $1 trillion this year. Students will be able to pay their student loans quicker and they will also be able to consolidate student loans easier.
President Obama aimed to take a load off of many college graduates with student loans. Starting in January, the plan will become law, helping those with federal and government loans.
Some university officials and student loan holders wonder whether the plan is worthwhile. Critics worry that the restructure is too costly and does not affect enough students.
“I think the plan sounds great overall, but I am doubtful about the fact that the income based repayment plan is only for borrowers who take out loans in 2012 or later, when there are already struggling graduates who borrowed within the last ten years,” said Jillian Baylor, senior journalism major at ODU.
Some questioned whether Obama’s plan would encourage more irresponsible borrowers who feel there is no limit on borrowing. Many people don’t fully understand the conditions of loans before they sign their name. The new plan, also hopes to encourage students to understand what they are giving up versus what they are gaining.