The presidential election is certainly heating up, and we’re seeing a lot of rhetoric come from both sides about a whole bunch of issues. Of course, student loans and access to a college education are issues near and dear to me. While the following should not at all be taken as a full-on endorsement of President Obama (my law practice is strictly non-partisan), here is a legitimate list of what the President has done for student loan borrowers since he took office:
- Removed private lenders from the federal student loan industry. Prior to the amendments to the 2010 Higher Education Act signed by the President, private lenders (such as Sallie Mae) were permitted to directly lend federally “guaranteed” loans: private money backed by the U.S. government. The President’s legislation eliminated this massive private-lending program so that now, the only entity lending federal student loans is the U.S. government. This is good for borrowers because it ensures uniformity in federal lending and provides more direct access to the many beneficial federal lending and repayment assistance programs that are out there that would not be available to these federally-backed private loans (such asPublic Service Loan Forgiveness.
- Improved Income-Based Repayment. President Obama fast-tracked an IBR improvement which will allow new federal student loan borrowers to pay only 10% of their income (as opposed to 15%) and have their loans forgiven after 20 years (as opposed to 25). While this won’t impact anyone who is already repaying their federal loans, it’s great news for current and soon-to-be students.
- Kept federal loan interest rates low. President Obama signed a compromise law passed by Congress that insured that undergraduate subsidized federal loan interest rates stayed low, at 3.4%. The interest rate was slated to double to 6.8%, which would have cost students thousands of dollars.
- Doubled funding for federal Pell Grants. Pell Grants are grants, not loans, available to low-income borrowers. Increasing funding directly helps the people who need it the most, and helps reduce or eliminate their potential student loan debt burdens.
- Maintained tuition and student loan interest tax credits. These tax credits lower the tax burden for borrowers paying for tuition or paying off the accumulating interest on their student loans. It’s not much, but it does legitimately help people.
These are all real, tangible benefits for student loan borrowers, and I’m glad we’ve seen these positive changes. Of course, it hasn’t been all good news. While I think the President’s initiatives have resulted in net gains for student loan borrowers, we have also seen some federal subsidizes eliminated for certain federal loans. Moreover, federal student loan debt collectors have been getting support from all levels of government. These changes concern me.
Ultimately, however, I am generally pleased with what the President has done for student loan borrowers in his first term. I just hope we see a lot more changes. We have a LOT more work to do, and we need major institutional reform- reform that makes it easier, not harder, to get an education and get ahead in life.
