10 June 2014 - Obama on student loans
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Obama moves to ease student loan burdens, urges Congress to act
Staff (The Chicago Tribune)
President Barack Obama on Monday signed an executive order making it easier for up to 5 million people to pay off college tuition debt, and scolded congressional Republicans for opposing legislation that would lower student-loan borrowing costs.
Obama signed an executive order allowing more people to limit repayments of federal student loans to 10 percent of their monthly incomes. The action will not take effect until December 2015.
The administration will also try to lower student costs by renegotiating government contracts with companies like Sallie Mae that service student loans, he said.
The president said Congress should also take steps to ease debt burdens on students, 71 percent of whom earn bachelor's degrees with debt, which averages $29,400.
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Context
Julie VerHage (Fox News)
As tuition costs continue to rise and students take on more debt, some policy experts say another taxpayer bailout of a teetering government-subsidized program -- the massive student loan industry -- is all but certain.
The numbers are startling: there is $1.11 trillion in student loans outstanding and $121 billion of them are 90-plus days delinquent or in default. Making matters worse, college costs are rising and incomes, particularly for college grads in industries other than technology and finance, are falling.
It’s a recipe for the same type of implosion and eventual government assistance directed to homeowners with delinquent mortgages and banks in the aftermath of the 2007 and 2008 housing meltdown and subsequent financial crisis. Access to cheap lending spurred by government incentives and subsidies from mortgage lenders Fannie Mae and Freddie Mac drove housing prices to bubble-like proportions until many borrowers discovered they couldn’t make good on their loan. Now, similarly easy access to college loans has both inflated tuitions and made college grads a new debtor class, economists say.
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Young democrats
Heidi Moore (The Guardian)
In another attempt to stem the economic threat of high student debt and win favor for his party before November’s election, President Obama on Monday signed an executive order that will limit federal student loan payments for 5 million more people.
Calling an education “the single best investment you can make in your future,” Obama extended the four-year-old Pay As You Earn initiative, which has lowered monthly payments for student who borrowed federal student loans for the first time between 2008 and 2011.
The program lowered monthly payments to 10% of a borrower’s after-tax income. Borrowers who graduated before 2008 or after 2012 had access to another program, which limits student payments to 15% of income.
Monday's executive order will extend the initiative to anyone with a federal student loan.
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Criticism
Staff (The Wall Street Journal)
You can tell an election is coming, because President Obama is promising more student-loan relief to young people who are growing less enthralled with his economic record. The latest exercise unveiled Monday is also supposed to make these young people forget the loan burden that earlier free lunches supposedly provided. The taxpayer losses will come on some other President's watch.
Specifically, Mr. Obama announced an expansion of the burgeoning disaster known as his Pay As You Earn program. This gift from taxpayers caps monthly student-loan payments at 10% of a borrower's discretionary income, regardless of how much the borrower owes. Even better, the borrowers have their debts entirely forgiven after 20 years—or merely 10 years if they work in government or nonprofits. Those who work outside the profit-making economy don't even have to report the forgiven loans as income.
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"10 June 2014 - Obama on student loans", La Clé des Langues [en ligne], Lyon, ENS de LYON/DGESCO (ISSN 2107-7029), octobre 2014. Consulté le 25/04/2024. URL: https://cle.ens-lyon.fr/anglais/key-story/archives-revue-de-presse-2014/10-june-2014-obama-on-student-loans