Earlier this week, in front of hundreds of students at the University of Colorado, President Obama unveiled a plan to reform federal student loan repayment. In this plan: repayments would be limited to 10% of an individual’s discretionary salary, consolidation of multiple loans would be permitted and, after 20 years, all loans would be forgiven [1]. As a result of this plan, millions of ex-students could benefit by paying hundreds of dollars less every month and thousands of dollars less overall, and with more than 60% of students with bachelor’s degrees having borrowed to pay for tuition (with numbers increasing every semester), this plan isn’t coming a moment too soon [2].
However, even with this accelerated program coming to fruition, there are still some major issues remaining. The most notable issue being the fact that this plan only applies to federal loans and not private loans; yet, it is private loans that are infamous for their outrageously high interest rates, high cost of monthly payment and, overall inflexibility in payment options. With more than 17 billion dollars of private money having been loaned out in 2008; the cost to the student borrowers who will now have to pay this off, is going to be phenomenal [2]. This would be difficult enough without being in a time when there are fewer and fewer well paying jobs availble.
Another issue is the fact that Obama’s plan really only treats the symptoms, rather than the underlying issue. The cost of an education in America is quickly becoming impossibly expensive and is only getting worse as funds that go to grants and scholarships are starting to get cut. Thus, giving young adults one of two choices: 1- trying their luck in finding a decent job that doesn’t require higher education or 2- going to college and being heavenly in debt for most of their adult lives; neither of which is ideal. Yet, as a student loan borrower myself, one must celebrate in the little victories. This plan is definitely on the right track towards helping many of us drowning in the debt of our adolescence. Even though this plan is not the ship we were hoping would take us ashore, a lifesaver is still appreciated when thrown in.
After reviewing several blog’s to decide which one to comment and critique on, I selected on Lauren’s Obama’s Federal Student Loan Reform. This topic interested me the most due to the fact that I am a student who once I graduate will be paying back student loans.
ReplyDeleteThis blog gave a very detailed explanation of Obama’s Federal Student Loan Reform program. Lauren gave exact details of what this plan proposed and explained the repayment plan easily for the reader to understand. The specifics she included on her blog delved into repayments, benefits, percentage of savings for an ex-student, consolidation and the time when the loan is dissolved. Lauren made a comment of how this program is not coming a minute too soon and backed up her statement by all the benefits she included in her blog.
I personally did hear about Obama’s plan but I as a reader learned more specifics of the plan by reading this blog. Lauren did a good job in making the reader enthralled at learning all major issues of this plan. The comparison between federal loans and private loans and how Obama’s plan would only pertain to federal loans. Lauren let the reader know that private loans are the ones that have higher interest rates, higher payments and less payment plans. The comparison really explains to the reader that this Obama’s plan might not be as good as it sounds. The figures how many students would be affected and percentage of savings is really appreciated to really show how many Americans this truly affects. This blog put in the forefront the true of Obama’s new plan as only treating the symptoms and not the real issue. I agree with Lauren that the true problem lies with tuition cost. This blog put the real issues in front of the readers eye’s and after reading it made you realize that Obama’s plan is not as exciting as it first sounded.
I enjoyed reading this blog. Student loans is one of the high problems for Americans especially how the economy is right now. This is a hot topic where even if Obama’s plan goes into affect, It will help a little. There needs to be something done with the high cost of tuition and a regulation on fees. It is crucial to obtain a college degree to find a good paying job but what good is that if you are paying high monthly payments each month to re-pay you student loans. I really liked how Lauren did the comparison between benefits and a broken down reality of what the programs truly means to us. It makes you think twice and she brought all points across and answered all my questions on her blog.
At first glance this plan seems like a winner in the eyes of students and former students who have miles of debt, but I have to disagree that this plan will even remotely help anyone right now. While this plan seems like a great idea I believe there are still too many open ends left open to even consider this as a possible option for student debt. My biggest question is what would happen to all of the leftover debt after the twenty year limit is up? Would it just disappear into thin air or would the government be held accountable for the left over debt? If the government were held accountable for the debt it would increase our national debt to a number that is already entirely too large. The idea looks great to the young adults who are now or getting ready to attend college but I believe that this proposal is a stunt by Obama to help him gain more support for the upcoming election next year. I think that Obama should be focused on how high the cost of college has become first and then focus on getting loans paid off. By focusing on the cost of college first he could cut the number of student loans by a considerable rate. This would in turn make the payoff rate for college loans much shorter. The cost of obtaininga higher education has become too high and something needs to be done to stopit from climbing. I believe that students should consider this before they start supporting this plan.
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