October 26, 2011
Metropolitan State University of Denver
Obama’s student loan reform hits home for Metro State students
By Caitlin Gibbons
President Barack Obama
President Barack Obama came to the Auraria Event Center Wednesday morning to tout his latest effort to reform student loan payments.
In his speech to a crowd of more than 4,000 people that included many Metro State students, faculty and staff, the president said he wants student loan repayment reform to start as soon as next year, rather than in two years as he had announced in his 2010 State of the Union address.
The reform will allow borrowers to cap their student loan payments at 10 percent of their discretionary income. The White House is estimating the reform will reduce monthly payments for more than 1.6 million student borrowers.
"We should be doing everything we can to put a college education in the reach of every American," Obama said.
The so-called “Pay as you Earn” proposal comes on the heels of rising tuition costs and unemployment rates for college graduates.
Across the country, tuition increased by an average 8.3 percent this year, twice the rate of inflation, to an average $8,244, according to a College Board report released a day before.
Tuition in Colorado has increased due to steadily declining state support for higher education. Metro State’s state support was reduced $7.1 million for the 2011-12 fiscal year, based on the end of federal stimulus funds and declining tax revenue. The College increased tuition and fees by 22.5 percent this fall semester.
Debt load grows
According to Obama, for the first time student loan debt has surpassed credit card debt. The average student carries $24,000 in student debt and the repayment process can be confusing with multiple lenders, he said.
At Metro State, 64 percent of the student population is not Pell eligible and must rely on federal loans, scholarships or pay out of pocket. The College awards $95 million in financial aid, including scholarships, and the average Metro State student receives $6,887 in financial aid per year.
The president’s reform would help consolidate loans into one payment and lower interest rates.
The administration is working on a “Know Before You Owe” fact sheet to distribute to students to ensure students know what they are getting themselves into as borrowers.
The proposal was met with rounds of applause from the audience, some of who waited in the snow for more than two hours for the opportunity to hear the first sitting president to ever visit the Auraria Campus.
“It was empowering to hear him speak,” said Maria Castillo.
A criminal justice student at Metro State, Castillo said she was pleased to hear the president speak about what students care about—student loans. Fortunately for her, she attends on scholarship and will not be graduating with debt. However, she said her friends and peers are struggling with student debt and are worried how they will be able to repay their loans post-graduation.
The president said he is ready to act, with or without Congress to make the student loan reform happen quickly to help Americans now.
“Education is not just important to our country now, but for our country’s future,” Obama said.
The moxie Obama demonstrated in his speech was exactly what Jeffery Washington, a senator in Metro State’s Student Government Assembly, said he was looking for.
“He’s tried to work with Congress and now it’s time for him to use his executive power to do what’s right,” Washington said.