Can RI’s Student Loan Crisis be Solved?
Saturday, June 09, 2012
President Obama this week took action by capping monthly payments on student loans for responsible graduates who make their payments on time.
On June 7, the President issued a memorandum to the Secretaries of Education and the Treasury to restructure the process and to improve the availability of information about student loan repayment options. In a speech later that day, he said the average college graduate leaves school about $26,000 in debt and noted that making college more affordable is a priority.
In Rhode Island, just 3,812 out of 127,839 student loan borrowers currently use an income-based repayment program. Many more borrowers could be eligible for this program, which would help more students manage their debt. Obama’s plan would make that possible.
“Streamlining the application process for student loan repayment options and making income-based repayment plans easier to access is a smart way to help more families pay for college,” said Senator Jack Reed. “The President’s plan will make it easier for thousands of Rhode Islanders to manage their student debt.”
Over the past several years, the Administration has worked to improve repayment options available to responsible student loan borrowers. Since 2007, former students have been able to enroll in an “Income Based Repayment” (IBR) plan to cap their student loan payments at 15 percent of their current discretionary income if they make their payments on time.
Legislation signed by President Obama in 2009 lowered this cap to 10% for borrowers beginning in 2014. In October, the President announced a “We Can’t Wait” executive action to make that lower cap available to more borrowers by the end of 2012, which will reduce monthly student loan payments for more than 1.6 million responsible student borrowers.
“I applaud the action President Obama took today that will help more Rhode Islanders and Americans ease the burden of student debt,” Congressman David Cicilline said. “Now, Congress needs to do its part and reach bipartisan agreement to prevent student loan rates from doubling on July 1st. Rhode Island students deserve nothing less.”
Despite policy improvements, too few responsible borrowers are aware of their repayment options and too many borrowers have had difficulties navigating and completing the application process. Although the Department of Education has recently removed some of the hurdles to completing the process, too many borrowers are still struggling to access this important repayment option due to the difficult application process.
The first two improvements will be to enhance online and mobile content by mid-July and to streamline the application with IRS data by the end of September.
Rhode Island leaders applaud the President’s action but believe that it is essential that Congress prevents the student loan interest rates from doubling.
“With a stagnant economy and persistently high unemployment, especially in Rhode Island, the last thing people need is to be faced with higher bills,” said Ian Prior, Republican Congressional candidate Brendan Doherty’s campaign manager.
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