College grads get some loan debt relief

Students facing large loan payments after graduation have a little relief coming from the folks in Washington, D.C.

The White House recently announced a new "Pay As You Earn" proposal that is expected to reduce monthly payments for more than a million current college students and borrowers through an income-based repayment program.

The proposal will allow about 1.6 million students to cap their loan payments at 10 percent of their discretionary income and will forgive their debt after 20 years of payments starting next year. This is a change from the current 10 percent and 25-year program.

Additionally, the White House estimates about six million students and recent graduates will be able to reduce their interest rates and consolidate their loans. The purpose of the changes is to increase college affordability by making it easier to manage student loan debt.

Mark Dunleavy, senior accounting major, has his own way of debt management.

"I pay as I go," he said. "I don't think [loans] are a good idea for anyone."

Dunleavy said loans have become the expected norm, and people get in trouble with them because the majority don't need them.

"[I think] people should live within their means. Loans promote slacking and a thinking of, ‘Oh, I will pay it later,'" he said.

Melody Barnes, director of the White House Domestic Policy Council, said in a conference call that some borrowers are discouraged from going into low-paying public service fields because of the high amount of loans that are often associated with them.

Michael Wiley doesn't have student loans, but he does think there are a lot of jobs out there that can be filled — specifically the fields that come with high education costs, such as nursing and teaching.

"I feel for a lot of jobs you don't get paid well for the degree," the freshman computer science major said.

Matching Wiley's sentiment, the White House used the example of a nurse earning $45,000 a year that has $60,000 in federal student loans is paying approximately $690 a month on the standard repayment plan.

On the current IBR plan, the nurse's payments would be lowered to $358, but on the new plan the nurse's payments would be reduced an additional $119 to a more manageable $239 – a grand total of $451 saved per month.

That monthly saving is hoped to stimulate the economy.

U.S. Secretary of Education Arne Duncan said that the administration thinks the country needs to educate its way to a better economy.

In the conference call, Duncan said that people want education at an affordable cost and one way to do so, in addition to the program, is by increasing the money in federal Pell Grants.

"We need a better educated work force," he said. "We are competing in a highly competitive work force in the world.

Duncan said that the United States is 16th in the world in college graduates and that the country needs a 50 percent increase to reach the president's goal of No. 1 by 2020. Additionally, he said there are two million unfilled high-wage, high-skill jobs.

These changes are one of the steps to reaching that goal, but not everyone agrees.

Jessica Aspesi, sophomore sports and fitness major, thinks the proposals are fair but can be hindering at the same time.

"The government shouldn't be involved [with loans]," she said. "Students should handle it themselves."

Sophomore business management major Terin Dallas agrees with Aspesi.

"I do feel there aren't enough people who are financially educated," he said. "I don't want to be one of them."