President Barack Obama announced an initiative on March 10 that aims to make it easier and more efficient for college students to pay back loans. Credit: Courtesy of TNS
There are about 1.97 million people in Ohio who have taken out student loans. That’s the equivalent of filling Ohio Stadium about 19 times.
And those people have piled up the sixth-biggest state debt in the country at more than $49.6 billion, according to information from the White House.
To try to combat the growing student debt problem, President Barack Obama announced an initiative on Tuesday that aims to make it easier and more efficient for students to pay back loans.
Five years after he signed student loan reform into law, Obama signed a presidential memorandum he called the “Student Aid Bill of Rights.” A presidential memorandum is similar to an executive order and is used to command government officials and agencies.
In this case, Obama is specifically directing the Department of Education and other federal agencies to work on making student loan payments more affordable.
“Higher education remains one of the best investments you can make in your future but also one of the best investments you can make in your country’s future,” the president said in a Wednesday conference call with college media. “The problem is it’s never been more expensive.”
The average undergraduate student graduates with about $28,000 in loans, the president said.
Obama said his memorandum aims to make student loan payments less complicated.
It will create a feedback system where students can voice their complaints about collectors, colleges, lenders and services, make sure their payments are affordable, that the process is fair and that students receive better customer feedback. The complaint system will be online and is set to be ready by July 2016.
Secretary of Education Arne Duncan said the Student Aid Bill of Rights also affects lenders.
“We’re going to make sure that the banks that service federal loans are held to high standards and provide better information to borrowers,” he said on the conference call. “We’re raising the bar for debt collection to make sure that these charges to borrowers are reasonable and collectors are fair, transparent and help student borrowers get back on track when they might need help.”
Part of the plan also involves pushing students to take advantage of pay-as-you-earn, income-based payment plans, which allows students to pay only 10 percent of what they make.
Obama said when he announced the plan in a speech at Georgia Tech that these plans have been underutilized so far.
“It gives you an opportunity to make sure that if you make a career choice that doesn’t make tons of money, you’re still able to do the responsible thing and pay back your loans at a pace that allows you to build a family and buy a home and live your lives,” he said in the Georgia Tech speech.
Duncan added that there has been a four-fold increase in those payment plans over the past year, adding that there are about 3 million borrowers currently participating. That’s less than 10 percent of the total 40 million borrowers, though.
The plan comes roughly two months after Obama announced that he was putting a plan through to Congress that would make community college free for two years.
That initiative was met with pushback from Republican legislators who questioned where the money would come from to pay for the schooling.
But Ted Mitchell, under secretary for the Department of Education, said this plan hasn’t received much pushback yet.
“We hear that and we want to move as quickly as possible,” Mitchell said.
Duncan said keeping high-wage, high-skilled jobs stars in the country starts with education.
“We have to think about this as the continuum from cradle through to career and do everything we can to give every young person a chance to have a world-class education, and we need political leaders across the political spectrum to invest in education rather than walk away from it,” he said.
Rachael Collyer, a fourth-year in English and Spanish at Ohio State and a field organizer and Columbus campaign leader with the Ohio Student Association — a nonprofit organization aiming to cut down on student debt loans — said she’ll graduate with $20,000 in debt this May.
“I was always taught, ‘You play by the rules, you work hard, you go to school, and then you make grades, you should be able to achieve the American dream,’ but that’s actually become more and more difficult and just become much harder to pay for school and to pay off school,” she said.
She added that since Ohio has cut higher education funding from its budget in the past, it’s especially important for students to pay attention to college affordability problems, and added that the federal government could be doing more to help.
Ohio has enacted cuts to per student funding of 27 percent in the last five years, according to the Center for the Study of Education Policy at Illinois State University and the State Higher Education Executive Officers. Collyer said student loan debts have nearly doubled as well.
“The cost to go to school right now is really high, and (with) the amount of debt that students are struggling under, it seems like we should be investing in the state of our future and students are our future, and shouldn’t we be making it easier for people to achieve an education and stay in our state?” Collyer said.
Amanda Etchison contributed to this article.
