“These changes will make a real difference”

I received this from the Obama campaign last night:

Rick —

President Obama just took two serious steps to make life a lot easier for folks with student loans — and there’s a good chance you or someone you know will benefit from these changes very soon.

Here’s how:

    — Effective this January, if you’re someone who has different kinds of loans — guaranteed and direct — you’ll be able to roll them both into one direct loan and bring down your interest rate. You’ll only have to write one check a month, and you’ll see a discount. This switch adds no cost to taxpayers across the board.

    — You might remember that, as part of last year’s student loan reform, borrowers’ loan payments could be no higher than 10 percent of their disposable income. This is a big deal — but it wasn’t going to help anyone enrolling before 2014. Today, the President announced that he’s speeding up this program so it will affect students next year — helping over 1 million students. This will have huge consequences for people struggling to make their student loan payments.

Sometimes, it can be hard to see how policy changes will actually affect your day-to-day life.

Not the case with this one. These changes will make a real difference in helping millions of Americans get by month to month.

Here’s how that real difference is translated:

Obama-liarThe Impact

Let’s consider the impact of each of these orders.

Consolidation

The first would clearly be the most significant, because it is aimed at helping more student loan borrowers. How much would an interest rate reduction of up to 0.5% affect payments?

For the average borrower, the impact would be small. In 2011, Bachelor’s degree recipients graduating with debt had an average balance of $27,204, according to an analysis done byfinaid.org, based on Department of Education data. That average has ballooned from just $17,646 over the past decade.

Using these values as the high and low bounds of average student debt over the last ten years, the monthly savings for the average student loan borrower would be between $4.50 and $7.75 per month. Clearly, this isn’t going to save the economy. While borrowers with bigger balances would save more, this is the average. And even someone with $100,000 in loans would only cut their monthly payments by $28.50.

Payment Limits

As mentioned, the government already has a program for borrowers to reduce their student loan payments to a ceiling of 15% of their income. At this time, just 450,000 borrowers are participating. Clearly, all of those participants would benefit from lowering the max payment to 10%. But how many others would?*

Student loan balances have really only ballooned over the past decade. So this change would affect very few Americans over the age of 32. For the young adults who it may effect, we must remember that educational attainment has some correlation to income. Those with the most debt will have attended business school, medical school, or law school. Most of those people will also have higher incomes, making them ineligible. For a person with the average student debt load, their annual income would need to be lower than $32,000** to qualify. The average income for Bachelor’s degree holders aged 25 to 34 is $40,100. 

Loan Forgiveness

Of all these parts of Obama’s executive order, the loan forgiveness aspect will have the least impact. By moving the timeline from 25 to 20 years, it could be significant in the long run — but it won’t be felt for decades. Remember, 82% of the current student loan debt outstanding was accrued in just the past decade. So it will be at least another 10 years before any of those borrowers have hit the 20-year mark in their student loan payments.

Read it all and understand how duplicitous this administration really is.

OWS vs TEA Party, by the Numbers
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  • Anonymous

    Behind every re-selection proposal is the kiss of death to the taxpayer M.O.  

    Barry is foundering haplessly looking for an approval bump.

    • Anonymous

      is this weak naked pandering to what he thinks OWS is about, or what?   I tend to think they’re not about student loans, but TBTF corruption and cronyism.

      • jim_m

        OWS is all about the handouts.  They are getting fed for free with donated food but they refuse to share it with the homeless because they see the homeless as freeloaders. Welcome to reality.

        Frankly, I think that this will work with the vast majority of OWS idiots.

      • “is this weak naked pandering to what he thinks OWS is about, or what?”
        Chico, I think you’ve got the idea.  He’s going with the loudest complaint, that folks have accumulated lots’o’debt in exchange for  worthless degrees that have no utility in any field that would actually let them PAY off their degrees – and he’s trying to remedy that so he can shore up his base of witless voters.  

        Think it’ll work?  I’m betting it will – at least for some.

  • How does the President’s directive effect the 72% of Americans without a college degree?  Are they supposed to pay for their “betters” education as well as everything else?

    • Of course.  As serfs, it’s our obligation to the elite class.

      You know that whole thing about the US being a classless society?  Well – that’s what Obama and his supporters are vehemently against.  They really, really want there to be a stratification – with THEM on the top.  They DESERVE to be on the top, because they’re the elite.  And you do not question the elite.

      Why are they elite?  Because they say they are, they appoint themselves such, and believe because they say so that they’re somehow entitled to the fruits of everyone else’s labors.

      Now, if you start trying to judge worth to society by actual ability, then your only measure is through actual accomplishment.  The most visible measure of accomplishment in our society s money – and what the elites prefer to play at studying usually doesn’t have much of a reward.  But it’s not ‘messy’, like the hard sciences.  They can keep their hands clean, and not worry about their peers thinking they’re actually doing ‘work’. 

      So now you see the self-appointed elite railing at those who actually work – who make jobs while making money. They’re parasites, cheering on the destruction of their host, believing that through that destruction somehow something amazing will happen and they’ll be at the top of the heap with all their prestige and power intact when the dust clears.

      It’d almost be laughable – if it wasn’t for the results we’ve seen so far from what they’ve managed to do. Would we REALLY want these bozos in control for another 4 years?

  • Can an older person get a student loan, include amounts for living expenses, enroll in social engineering classes, while living off the government loan, and then get forgiveness in 20 years? 
    I want in on it!

    Let’s call this The Reverse Education Loan Plan and include a free unicorn with every contract.

  • Anonymous

    I say we need to tax the smart.  All the smartness is concentrated in the 1% of folks in out population who work for the Obama Administration or fawn over it.  The rest of us are just plain so dumb we can’t see how brilliant they all are.  I think if we all were to get, say an extra 20k a year, to make up for this horribly unfair inequality, things might just turn around and unicorn farts would again filter through rainbows of decadent delight.

  • The loan forgiveness is a time bomb for future taxpayers.  It’s too far out to be scored by CBO, but will cut revenues to the Treasury.

    The income restrictions help some, but it turns out to be a reward in the form of loan forgiveness to spend borrowed money on worthless degrees that do not increase earnings.  In effect we are subsidizing Gender Studies and other soft curricula.

  • Anonymous

    Hmmm……….who’s he going to pander to next?

    • GarandFan,

      I can be bought!

    • Anonymous

      You can rest assured its not going to be the bitter clingers.

  • Anonymous

    I have a solution –

    4 years in the army for a paid off student loan.

    Think it’ll catch on?

    • herddog505

      I’m pretty sure that the Army has NO interest in many of these yobs.  Not that four years as an enlisted soldier in combat arms wouldn’t do them a power of good…

  • Anonymous

    Hmmm, and Obama was going to make it easier to find a job too.  Of course, after what just happened at one federal agency, at least we found out why no
    one has been able to find a federal job … http://www.ombudizen.com/2011/10/27/department-of-redundancy-department/

  • Anonymous

    “Hmmmm, and Obuma was going to make it easier to find a job too.”

    He has…In every Country except this one!!

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  • Anonymous

    Lowering the monthly payment will also have the effect of increasing the total cost of the loan, since the interest will continue to accrue.