President Barack Obama announced a new series of measures Wednesday that he hopes will make repaying federal college loans easier for students. The decision followed a USA Today article published last week, which reported that student loans would reach $1 trillion before year’s end.

The plan is also a response to a petition signed by more than 600,000 people asking Congress and Obama to forgive all student loans, according to an Oct. 26 New York Times blog post. Several of the borrowers asking for relief are participants in the recent Occupy Wall Street protests, who claim they suffer under the current economy and high unemployment rates.

Known as a ‘Pay As You Earn’ plan, Obama’s proposal aims to speed up the timeline of an already approved loan repayment plan that would lower monthly student loan payments for graduates whose debt exceeds their earnings, according to an Oct. 26 CBS news article.

The original plan approved in 2010 stated that borrowers would have the ability to decrease their monthly payments from 15 percent to 10 percent of their income by 2014, and their debt balance would be forgiven after 25 years rather than 20 years. Obama now hopes to use an executive order to make such benefits available to borrowers by 2012 instead, according to the article.

‘My sense is that the president is afraid that students won’t go to colleges and universities because of issues with student loans, which would impact the colleges and universities and even hurt the economy down the line,’ said Donald Dutkowsky, professor of economics at the Maxwell School of Citizenship and Public Affairs.

The economy is very dependent on college graduates because they have a much lower employment rate and are more employable than those without college degrees, Dutkowsky said. Employers would like to see more and more college graduates, and Obama’s plan could generate those results, he said.

‘A big obstacle in all of this is money and student loans, so I think President Obama’s program is more to get kids to think about going to college and not to drop out because of financial reasons,’ Dutkowsky said.

The program won’t have a significant effect on the economy because it is small in scope and won’t hurt the federal budget, Dutkowsky said. The goal of the plan is mainly to keep student flow into colleges and universities despite student loan debt increasing, he said.

‘In this economy, whether it’s in its current sluggishness or even as it improves, we’ll still need a steady supply of college graduates,’ he said.

SU students are already displaying support for the proposal, as many of them recognize they will be graduating in debt.

‘I feel like anything that will lower any student debt is a good idea,’ said Arianna Rogers, a sophomore economics major. ‘I know I’ll have quite a bit of debt after I graduate from college and that it will take time to get rid of it, so hopefully Obama will decrease it by a lot so it’ll be less stressful when I’m working.’

Erin Castle, a sophomore nutrition major, said she is required to do an unpaid internship for one year after her graduation, which makes the burden of student loans greater.

Said Castle: ‘I have a plan for saving money ahead of time to pay off loans, but anything the president can do to lower debt would still be helpful.’

meltagou@syr.edu

Published on October 30, 2011 at 12:00 pm

Contact Marwa: meltagou@syr.edu | @marwaeltagouri