With the nation’s student-loan debt approaching $1-trillion, and default rates at their highest level in a decade, President Obama is taking modest steps to ease students’ debt burdens.
Mr. Obama and administration officials announced changes this week that will reduce monthly payments for low-income borrowers and drop interest rates for students who consolidate into the government’s direct-loan program.
The announcements — which came as the Occupy Wall Street protest stretched into its fifth week, fueled in part by borrowers with large educational debts and slim job prospects — were billed as a response to petitions urging the president to forgive student loans to stimulate the economy.
But the president’s plan is a far cry from the kind of relief that the Wall Street protesters and other debtors are demanding, and it won’t do a thing to address the roots of their repayment struggles: rising tuition and high unemployment.
Last year, the unemployment rate for college graduates under the age of 24 rose to 9.4 percent, the highest level in at least 15 years. Meanwhile, college tuition has continued its inexorable climb, reaching an average of $8,244 for in-state students at public colleges in 2011-12, and $28,500 at private four-year colleges, according to College Board figures released this week.
Another challenge: Next July, the interest rate on student loans will double, to 6.8 percent, costing the average borrower thousands of dollars over the life of his or her loan.
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