College graduates could soon have an easier path to paying back student loan debt as the White House has turned its attention to lessening the burden on those making payments.
As the deadline approaches for Congress to extend the current 3.4 percent interest rate on student loans, the Obama administration has seized the opportunity to push a plan of its own in what could become a re-election issue, CNNMoney reported. Obama is proposing an easier way for students to enroll in an income-based repayment program, which allows them to pay 15 percent of monthly discretionary income and have their debt forgiven after 25 years.
The program has more than 700,000 participants, but Secretary of Education Arne Duncan said he believes millions more could benefit from it. The current enrollment process takes more than six weeks, as students must contact loan providers.
The new proposal would allow them to enroll on their own on the internet.
“We have a long way to go,” Duncan was quoted in CNNMoney. “Just by making the process much less complicated and more simple, we’ll hopefully see many more of our folks take advantage of this going forward.”
Obama’s proposal comes amidst inter-party fighting over the extension of the student loan interest rate. Though both parties agree on keeping the low rate, they have disagreed on how to pay the $5.9 billion cost that comes with it, the Kansas City Star reported.
Democrats have proposed increasing payroll taxes on some privately held companies, while Republicans have insisted on spending and passed a plan in the House of Representatives to cut funding for disease prevention and public health. That proposal has stalled in the Senate. Some politicians have even advocated for student loan forgiveness as a form of economic stimulus.
If no change is made, close to 7 million students would see their rate rise to 6.8 percent in July.
The student loan proposal is seen as an important election point for Obama, whose re-election chances could hinge heavily on the 18- to 29-year-old vote.