President Barack Obama was in Denver on Wednesday, presenting a plan that provides debt relief to millions of Americans shouldering student loans.
The central element of the plan brings forward the implementation of the “Pay as You Earn” proposal, already passed by Congress, from 2014 to 2012. The proposal affects about 1.6 million students and graduates, allowing them to cap their loan payment at 10 percent of annual discretionary spending, rather than 15 percent as previously dictated. It also provides debt forgiveness after 20 years of payment, rather than 25 years as current law allows.
In addition, Obama’s plan gives borrowers who hold both government loans and government-backed private loans the opportunity to consolidate them into one loan with an interest rate up to 0.5 percent less than before - potentially helping 6 million borrowers.
The announcement comes as student loans in America are expected to exceed $1 trillion this year, surpassing outstanding credit card debt, according to the Federal Reserve Bank of New York. More than $100 billion in loans were taken out last year alone.
Arne Duncan, U.S. Secretary of Education, said people who attain higher education need the help.
“College graduates are entering one of the toughest job markets in recent memory,” Duncan said according to a White House statement. “We have a way to help them save money by consolidating their debt and capping their loan payments. And we can do it at no cost to the taxpayer.”
The President’s plan does not require Congressional approval.
“Steps like these won’t take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference,” President Obama said according to a White House statement. “And until Congress does act, I will continue to do everything in my power to act on behalf of the American people.”
The President chose to make the announcement at the Auraria Campus in Denver - the biggest city in a swing state that Obama won in 2008 and is crucial to the upcoming presidential election. In fact, it was in Denver that Obama accepted his 2008 presidential nomination at the DNC Convention. But Colorado Republicans say they are still waiting for Obama to make good on the promises he presented then.
"Unfortunately, no matter how you slice it, Coloradans are worse off now than they were when President Obama took office,” Ryan Call, chairman of the Colorado Republican party, told the Denver Post. “And no amount of campaign cash or empty rhetoric will put our state back to work."