Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Obama Lays Out New Student Loan Plan

President Barack Obama’s announcement of significant changes to student loan repayment plans Wednesday garnered approval from university officials lobbying for student loan reform.

“In a global economy, putting a college education within reach for every American has never been more important, but it’s also never been more expensive,” Obama said in a press release.

This latest move to consolidate student loans and reduce interest rates is part of his administration’s efforts to increase college affordability.

In 2014 the government will implement a “Pay as You Earn” program, limiting monthly loan payments for student borrowers to 10 percent of their discretionary income. The program will also forgive all loans after 20 years, instead of the current practice of  25 years. According to the press release, 1.6 million borrowers will be able to start consolidating their loans in January of 2012.

Associate Vice President for Federal Relations Scott Fleming said the university supports student loan reform as a part of its lobbying activities on Capitol Hill.

In a press release, the university said that it sees the “Pay as You Earn” program as a way to help students pursue greater opportunities in the future.

“[This program] may prove especially helpful to graduating students who pursue service programs such as Teach For America, the Peace Corps and Jesuit Refugee Services,” the university’s official comment said.

But Fleming said that few Georgetown students will need loan restructuring. Because of the university’s commitment to providing need-based aid and graduates’ ability to find higher paying jobs, many borrowers pay off their loans promptly.

Georgetown students’ default rate is 0.8 percent, compared to the national private college rate of 4.6 percent.

Ryan Zimmerman (COL ’12), who receives financial aid from Georgetown, said that government assistance would help lessen the pressure of paying back loans.

“With student loans that will need to be paid sooner rather than later, consolidating my debt at a lower interest rate in a pay-as-you-go program is obviously something that will lessen my financial strain,” he said. “It’s stressful enough to try to find a job when there are no jobs to be had, but to be in any amount of debt while being unemployed is a restrictive burden on anyone entering the real world.”

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