By Katie Barlow
President Obama announced a new plan to help students repay their student loan debt while visiting the University of Colorado Denver campus.
The speech was made on the same day College Board announced prices of college continuing to rise.
The New York Daily News gives a quick and simple explanation of what this means for borrowers and reported that a Department of Education report shows a balance of federal student loans at $610 billion.
CBS reported that Obama shared with students his own personal experience with student debt, explaining how he and Michelle owed over $120,000 in loans to multiple lenders. The article said Obama took nearly a decade to pay off and he had to find a way to both pay off his and Michelle’s loans as well as save for their daughters educations. According to CBS, millions of borrowers could be affected by the new plan.
The maximum required payment on student loans would be decreased. Remaining debt would be forgiven in 20 years instead of 25 years. Students with more than one borrower would be enabled to consolidate the loans into one, with a slightly lower interest rate.
The Washington Post indicated that this new plan will cap federal loan repayments at 10 percent of discretionary income, effective January and will be titled, “Know Before You Owe.”
According to Reuters, more than 36 million Americans have federal student loan debt and that Obama does not need approval from Congress to make these changes take effect.