Obama offers life saver to college students drowning in debt
October 26th, 2011
04:52 PM ET

Obama offers life saver to college students drowning in debt

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DENVER (CNN)— More and more college students are facing tuition sticker shock. A new report by the College Board Advocacy & Policy Center shows the average cost of tuition and fees at four year institutions jumped to 8.3 percent this year. That’s more than twice the rate of inflation.

For many young people that translates into bigger loans and more debt at a time when it's hard to find a job after graduation.

Against that backdrop President Obama flew to Denver, Colorado to push a plan that he says could help 1.6 million people save hundreds of dollars a month.

“We should be doing everything we can to put college education within reach for every American,” the president said during a campaign style event on the Denver campus of the University of Colorado.

Rita Whittington, a special education major who jokingly feels she has already earned a degree in student loans, says it's a burden.

“I've taken out extensive loans. First I educated my children, three of them I sent to college,” she told CNN. “ So I have parent loans and now I have student loans. So this is extremely costly for me."

The costly burden of a college education is weighing on students across the country. Earning a diploma is followed by this reality: an average debt of nearly 23-thousand dollars.

Antonio Valenzuela, a junior getting a degree in converging media, says debt is a way of life that he tries not to think about.

"Truthfully it's the silent killer because you actually never see the money its usually financial aid and things like that or loans that you take so you know kinda never having it tangibly in your hands makes it more a very difficult to conceptualize how much the debt is,” Valenzuela said.

President Obama says he’s attempting to lessen the shock and lighten the load without Congress.

"We can't wait for congress to do its job. So where they won't act I will," he said.

Explaining the details of a plan that was already in the works, the president said the repayment amount of a federal student loan will be limited to 10% of discretionary income, and the timeline for that to kick in has been moved up to next year.

In addition, after 20 years all debts will be forgiven, which is five years sooner than current rules allow.

The program will also make it easier to consolidate student loans.

But the president’s critics who have been painting his new “we can’t wait” slogan as “campaigning” and “saving his own job,” jumped on this latest effort.

"[T]he president has once again chosen to put politics before policy, touting a plan that will do nothing to help the nation’s unemployed workers," said the Republican chairman of the House committee on Education and the Workforce Rep. John Kline.

And in a statement, Senator Lamar Alexander (R-TN) said “The real way to reduce the burden of student loan debt is to slow down the growth of tuition.” Alexander suggested that could be done by reducing “health care costs and mandates that are soaking up state dollars,” that he argues could be used for education.

Whittington, who had been majoring in economics, says she’s cautiously optimistic that the plan will help students like her shoulder the burden. The process of running up debt is painful but necessary.

"I think it is good for us to put ourselves in a better place for the future, “ she said. “I think we’re a good investment in that we are working to get the education so that we can get into the job market at a higher level than we would without one.”


Topics: President Obama • Student Loans • The News

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  1. t. beth

    “We should be doing everything we can to put college education within reach for every American,” the president said during a campaign style event on the Denver campus of the University of Colorado

    Most of the Presidents appearances including the "Jobs Plan" tours, have been campaign style. I have searched the web and can't find specific information on who is footing the "bill" for all of this travel. Is it the taxpayers or the DNC?

    It is so very obvious that these are campaign appearances. Why do I say that? Because if they are not he is wasting tax dollars to promote plans that we already know won't be introduced or passed by Congress.

    Regarding student loans, loan payments may be capped at 10% but what about the accumulation of interest? It is still going to accumulate and at a bigger pace as none of the 10% payment would be applied to principle. So, while he is at it, how about he caps total interest that can be charged over the life of the loan. Otherwise, there are going to be an awful lot of loans forgiven in coming years. Given that, why not just make the loans zero percent interest for the first 5 years. Atleast some principle would be paid down before interest would start to accrue.

    Touting his plans sound good but it is just political, re-election garble. None of it is going anywhere until after the election and he has no idea if the Democrats will support it.

    October 26, 2011 at 5:30 pm |
    • Howard

      The obama student assistance scam is just another empty obama political ploy.
      The actual benefit to students with his plan is miniscule ... but, obama will milk it
      and demogogue it for all the B.S. he can. obama is a shameless, self-serving
      con man ... the main stream media are his shills ... and, the American people
      are his marks !!!

      October 27, 2011 at 12:33 pm |
      • JOE

        Yes, minuscule is right. My daughter said she'll save $5 a month under obummers plan. This clown for a president, thinks he can snow the people. Well guess what, the majority of us don 't buy your bs

        October 29, 2011 at 11:02 am |
    • Ryan

      Some of the comments on this are ridiculous. John said it was a "cost" problem. So is everything that is in high demand (e.g. healthcare). The problem comes when you try to devise plans to curb costs of these institutions. What would really help is regulating the University of Phoenix, et all, that basically say "if you can pay, you can have a degree." That's the real problem–the education does not fit the cost. But I'd love to hear suggestion and easy fixes on how to fix the skyrocketing costs of higher education and healthcare from the know-it-alls on this thread. Oh wait, it has everything to do with the market, and people that complain about cost are often also free marketeers, who think laissez fair is capitalism's panacea. And "t. beth," I seriously doubt anything in the Obama plan would preclude anyone from early repayment. So if you're worried about the interest, I'm sure you can pay it off. I don't favor the plan, but it seeks to alleviate the monthly burden of large payments and the long-term burden of neverending student loan debt–perhaps the most worthy debt that any of us consumerists have.

      October 28, 2011 at 6:55 am |
  2. Jeff Anttila

    Well, if more Fortune 1000 companies offered tuition reimbursement to qualified employees, without overloading them with a bunch of work, there wouldn't be these types of wallstreet protests.

    Also, if Companies paid their taxes (through Repatriation) instead of leaving their money in overseas accounts, business could probably support their employees better. However, during the last 10 years, there has been a number of accounting tricks used to prevent this type of investment into companies own employees, and when your overworked, you don't have time to take additional classes outside of work to further your career.

    When I was at The Boeing Company, I worked in a unique position and helped out the team when a colleague was attending Oxford (in England) She'd be out of the office for a few weeks every other month, in England, working on her degree, and frankly, it was in a different area of study than the work she did. The Boeing Company is a great example of how companies should invest in its employees rather than trying to mitigate or reduce costs, including healthcare, insurance, and other benefits. Companies that invest in these types of efforts, are typically operationally sound, and will attract talent. Other companies will probably outsource to reduce costs, in an effort to appease shareholders. It's a difficult balancing act, but with The Boeing Company, it shows in the quality of their finished products. Did you see that 787 take off to Japan?

    October 26, 2011 at 7:04 pm |
    • Steveo

      Jeff under your suggestion, the cost of goods and services will go up. This isn't coming out of the pay of CEOs or board members!

      October 27, 2011 at 6:35 pm |
  3. Dee

    It does not matter this is a plan for students that he is using the Executive Order to bypass Congress on this. Other Presidents have done the same thing and traveled and noone worried about who was footing the bill. Why is it always this President. These Young people are the future of this country and there is not another candidate out there who is addressing the needs of young people but President Obama.

    I work with young people and they said the older people in congress are out of touch with them that's why they can relate to the President. He is technolgy savy/smart and understands the future of this country and is not stuck in the past as the older people.

    Instead of criticizing this President for what he is trying to do without the help of the "NO" congress we should be admiring him for going it alone.

    October 27, 2011 at 6:00 am |
    • John

      We should be "admiring him"? Libs – WAKE UP!!! This guy works for us. Stop drinking the cool-aid. The root of the problem is tuition – can any school really justify $50,000 a year plus? But, of course, the hot bed of liberalism resides in higher ed today so the libs/dems don't dare try to address the real peoblem. The hot topic for the Libs/Dems/media lately is how much is owed in student loans – and how we need to fix that problem. Once again the Libs/dems feel the need to be big brother and promote the socialist agenda.
      2012 can't arrive soon enough.

      October 27, 2011 at 7:18 am |
      • Falon

        John, I agree.
        As a college student, I am struggling financially. I do not qualify for grants, but I do qualify for loans. The problem comes each semester when the amount of loans awarded to me do not cover the cost. This semester I have to pay about $4,000 out of pocket. That is not feasible for my family or I to pay. I just would like enough loans to cover my school. I am not asking for "free money", but in fact, just a better way to finance these outrageous cost.
        I do like the fact that Obama is addressing the issue, but I think he is not looking in the right direction. Maybe easing some of the financial burdens of the states in other areas will allow my state to fund the public universities more adequately. Also, in Obama's suggested plan, who is footing the bill? I do not want others to have to pay for my education. That just wouldn't be right.

        October 27, 2011 at 12:30 pm |
    • Linda

      Are you kidding me? What happened to personal responsibility? Do the young kids you are talking about understand that? I have three kids who have graduated college in the last six years. They are being resonsible and paying back their student loans. They made the decision to go the schools they went to. The youngest just graduated. She choose a local college because she didn't want to take as much money in loans. We helped them as much as we could, but made it clear how much they were responsible for. Now they feel they are being penalized for doing the right thing!

      October 27, 2011 at 10:23 am |
    • Steveo

      Dee,

      IF he is by passing Congress, what happens when Congress fails to fund it? Issuing EOs are one thing, paying for it takes Congress!

      October 27, 2011 at 6:38 pm |
    • Taah

      Perhaps the evidence was in mhtons of slow but steady recovery, which was showing clear signs of strengtheningThere have not been mhtons of slow, steady recovery and the economy has not shown any clear signs of strengthening. The GDP numbers have been consistently revised downward and the unemployment numbers have been consistently revised upward.As far as Dim proposals go vis a vis payroll taxes, the Republican opposition likely stems from the fact that short term cuts are not solutions which will result in hiring. Also, the Republicans are now in a position where they can push for bigger things which will produce bigger and better results.The mere fact that the Dims are hurling accusations of sabotage around does not make it true. Good try though.Reply

      March 2, 2012 at 9:42 am |
    • Lucas

      Back in Feb Obama told the US Chamber of Commerce to start hiring.But did Obama undo any of his job-destroying pceloiis, which are eroding confidence, fostering uncertainty, and crowding out private investment?Nope, if anything Obama has doubled down on them since Feb.Obama wants more of the same.But our right now.This latest ploy of putting Joe biden in charge of deficit talks (now Obama HAD to go in) was proof that Obama wasn't the least serious about getting a budget, making cuts, or anything of the sort. Beforequit he pointed out that, Each each side came into these talks with certain orders, and as it stands the Democrats continue to insist that any deal must include tax increases. There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.”Obama wants the gov't to spend 23.6% of GDP by 2012.Tax revenues will be 16%.That cannot work.Ryan's roadmap limits spending to around 19%.Ryan's tax revenues are pegged at 19% also.Why not get spending down to 18.5%?So, to be fair, not even the Ryan roadmap, plan avoids eventually hitting our debt limit.So, we all need to get back to work.Too bad they take so much time off, huh?At least here in CA the legislature is working for free until they pass a budget.Reply

      March 3, 2012 at 10:21 pm |
  4. craigM

    So, who pays this debt off? The American taxpayer who else!!! This is absolute BS and someone needs to be held legally accountable for theft from the American taxpayer.....Obama is a charlatan who is nothing more than a modern day pied piper!!

    October 27, 2011 at 7:23 am |
  5. Free Man

    A contract is NOT a contract... Makes perfect liberal sense... Fraud and misrepresentation by BIG EDUCATION has nothing to do with it...

    October 27, 2011 at 7:34 am |
  6. ObamaIIsASackofSit

    Obama didnt do anything its the taxpayers who are expected to shell out their savings to protect these lazy azzzes.

    October 27, 2011 at 8:40 am |
    • Ryan

      Was Iamabiasedsackofsit unavailable?

      October 28, 2011 at 7:00 am |
  7. steveo

    Greed will destroy us. Let me explain. Big universities are slowly but surely pricing themselves out of the market. At the same time we seem to think only a "big name" school can educate us. Reconsider community colleges! Consider trade schools! I understand the frustration but no was forced to sign on the dotted line! Personal responsibility still means something (I hope). Lastly big schools have big football programs that generated big money! Maybe the schools need to start using some of that! I am just concerned that government intervention is going to make things worse! Just to be clear, I am helping my 2 children who have student loans!

    October 27, 2011 at 9:12 am |
  8. hv19006

    I'd like someone to explain non-discretionary income. If someone goes out and buys an expensive house and car, does that lower the amount he has to pay back every year because his discretionary income is lower. If I spend enough on necessities, my loan will be forgiven. I don't have a problem with extending the time needed to pay the loan, but getting the loan forgiven, that's just plain wrong.

    October 27, 2011 at 9:28 am |
  9. eyeswideopen

    College costs controlled through 'sane salary for work done', e-books and reducing US Dept of Education to volunteers... not bailouts. Realize unionized teachers won't like it, but real teachers will!

    October 27, 2011 at 10:53 am |
    • will

      real teachers need to eat too. Maybe you should do your job for free, after all its probably less helpful to our society than a teacher.

      November 9, 2011 at 12:08 am |
  10. jefs52

    Mr. President: Could you be more blatantly political? The country is Broke. Are you going to pay for these huge subsidies with your personal wealth of 12 million or more first? Look at what he is proposing people. It is pie in the sky and undoable % wise.

    October 27, 2011 at 11:01 am |
  11. jefs52

    Why is my comment being moderated? There is no swearing, profanity, etc. It is thought provoking or isn't that allowed at CNN now?

    October 27, 2011 at 11:03 am |
  12. REM

    I am so tired of the current whiney 'entitlement' generation. Do what you have to do, just like all of the generations before you. I graduated college 22 years ago, $30K in debt and my first job paid $17K/year. Yes, it took me 9 years to pay it off, but I did, and I did it myself. Why? Because I'm responsible and haven't had a silver spoon my entire life. I worked three jobs while in college just to pay my expenses – myself. Just do what you have to do and stop asking for handouts. Why are we raising a bunch of wussies who don't want to work for what they want?

    October 27, 2011 at 11:54 am |
  13. SaveRMiddle

    It's completely about re-election.

    If that's too difficult to accept, don't read more than the headlines involving the We Can't Wait programs.

    October 27, 2011 at 5:48 pm |
    • Diana

      Dr.John great acirtle very well researched and splendid lay out. Don't pay no attention to the Liberals (Socialistic Communist) It seems a lot of them have been on some Steroidic hormones the last couple of days. If they gave them a shot of reality it would probably kill them.They talk about integrity and respect but it is obvious this is only a concept to them. It is amazing how they come on the blog and shoot those stupid ignorant one liners after clearly not reading your material, and try to make out as if they are actually saying something worth addressing! They are making me believe in male menopause the way they can not understand the most simple and clear concepts of reality!Reply

      March 1, 2012 at 9:33 pm |
  14. Milan Moravec

    Costs of providing higher educatio must be controlled. Current pay increases for generously paid University of California Faculty is arrogance. Instate tuition consumes 14% of Ca. Median Family Income!
    UC Berkeley (ranked # 70 Forbes) tuition increases exceed the national average rate of increases. Chancellor Birgeneau has molded Cal. into the most expensive public university.
    President Yudof and Chancellor Birgeneau have dismissed many much needed cost-cutting options. They did not consider freezing vacant faculty positions, increasing class size, requiring faculty to teach more classes, doubling the time between sabbaticals, cutting and freezing pay and benefits for all chancellors and reforming the pension system.
    They said such faculty reforms “would not be healthy for University of California”. Exodus of faculty and administrators? Who can afford them and where would they go?
    We agree it is far from the ideal situation, but it is in the best interests of the university system and the state to hold the line on cost increases. UC cannot expect to do business as usual: raising tuition; granting pay raises and huge bonuses during a weak economy that has sapped state revenues and individual Californians’ income.
    There is no question the necessary realignments with economic reality are painful. Regent Chairwoman Lansing can bridge the public trust gap with reassurances that salaries and costs reflect California’s economic reality. The sky above UC will not fall

    Opinions? Email the UC Board of Regents marsha.kelman@ucop.edu

    October 27, 2011 at 6:30 pm |
  15. truindep

    must be talking about those liife savers in the rolls,

    October 28, 2011 at 10:27 am |
  16. Liz Carter in Georgia

    JOE, Although I can sympathize with her, there have been millions of 'working poor Americans' who haven't, for ages, without hard core determination and giving up something, who haven't been able to save $5.00 per month under several administrations including the last one. So ask your daughter how does it feel to be working, underpaid, and seemingly getting no where. She's not the first and probably won't be the last. The bubble has bursted! OLD SAYING...'Ain't no fun when the rabbits' got the gun', is it?

    October 31, 2011 at 5:04 pm |
  17. Dee

    Steveo,

    Do you think the country will be in better shape with Perry the President? I don't think so sorry if you have a major catastrophy where you live you are on your own. No Government help

    November 3, 2011 at 10:56 am |
    • steveo

      Dee,

      I am not supporting Perry. I do feel the that party purists will nominate him though! Do I think the country will be better off under Perry? I don't know, just like I don't know if it will be any worse!

      "if you have a major catastrophy where you live you are on your own. No Government help".

      Dee, I'm middle class, sometimes I feel like that now! Yet not truly accurate!

      November 3, 2011 at 11:38 am |