Student debt refinancing has been a hot button issue for a long time, and it has been a key issue for the Obama administration. In a world that tells you that you need a college education in order to get a decent job, then puts an astronomically high price tag on that college education, it’s understandable that people are concerned about student debt refinancing.
Compounding the problem, the federal student loan and grant programs make it possible for students to rack up debts no sane lending institution should ever allow.
What good does it do to prepare for a career if you end up saddled with student loan debts that will take a lifetime to pay off, even with refinancing? The Obama Administration did an end-around Congress when the President signed an executive order making radical changes to the way Americans can handle student debt refinancing.
The executive order, which President Obama signed on June 9, extends a plan that has been in force since 2010. The 2010 student debt refinancing plan capped repayments at 10 percent of a borrower’s income if the student had taken out the student loans since 2007. President Obama’s executive order yesterday extends the student debt refinancing program to everyone, regardless of when they took out student loans.
In addition to signing the executive order, President Obama is asking Congress to pass a student debt refinancing bill proposed by Senator Elizabeth Warren. You can read about the Warren proposal in this related article in The Inquisitr.
According to a CBS report, President Obama intends to fund the executive order by closing tax loopholes for business. He also made clear that he intends to push student debt refinancing programs forward whether Congress approves or not.
“While Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans.”
Translation: If Congress doesn’t pass laws promoting student debt refinancing, the President intends to sign executive orders.
President Obama did not say whether he planned to close the tax loopholes via proposing legislation or if he also intends to bypass the legislative branch of the U.S. government for that and simply sign executive orders.
Senator Mitch McConnell (R-KY) suggested that a more fitting way to address the rising costs student loans and their refinancing place on Americans might be to address the cost of education itself – much of which is already underwritten by state and federal programs. According to the CBS report, Sen. McConnell had this to say:
“This bill (that Senator Warren proposed) doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy.”
Some have gone so far as to suggest that President Obama’s executive order is a political stunt, designed to take attention off of issues like Benghazi, the VA Scandal and the Bowe Bergdahl-Taliban prisoner exchange.
Accusations of wagging the dog are nothing new, but given the fact that there is considerable bipartisan support for student debt refinancing reform – as evidenced by the fact that Congress passed a bill last year linking student loan interest rates to the financial markets, as reported on by CBS News – it does cause some to question why President Obama won’t let the Congress fulfill their constitutional responsibility of passing the laws rather than continually using the often-questioned practice of signing executive orders.
So, what do you think? Was President Obama’s student debt reform a political stunt or did it represent much needed reform – or both?