Obama discusses new Student Aid Bill of Rights with college newspapers
Even President Barack Obama has experienced the burden of repaying enormous student debt but said he would not be where he is today without federal grants, loans and work study programs.
Obama addressed the issue of college affordability with approximately 50 college newspaper reporters from across the nation on a White House conference call yesterday afternoon. The conference call coincided with a visit Obama made to Georgia Tech University a day earlier to outline his Student Aid Bill of Rights.
Following Obama's address was a Q&A session with Arne Duncan, Secretary of the U.S. Department of Education.
“The average undergraduate student who borrows money to pay for college is looking at $28,000 worth of student loan debt,” Obama said. "... We have to make sure those same tools are available for young people to be able to not only get a good education, but also to not be loaded down with huge debt."
In New Jersey alone, 1,206,000 student borrowers have amassed a bill of more than $30 billion, which is why Obama and the Department of Education are taking numerous initiatives to reduce the cost of college and increase the availability of grants.
Five years ago, the White House enacted one of the largest student loan reforms in history, Obama said. The reform increased the maximum Pell Grant by $1,000, let borrowers cap their student loan payments at 10 percent of their income and expanded tax credit.
“We estimate that we saved the typical undergraduate $1,500,” Obama said.
But Obama said there is still work to be done, such as making community college free, further increasing access to Pell grants and expanding the pay-as-you-earn plan.
Free community college alone would reduce student debt by 20 to 30 percent, said Ted Mitchell, Under Secretary at the United States Department of Education.
The number of borrowers who enrolled in the pay-as-you-earn plan, which allows graduates to base repayment plans on income, tripled in the last year and has attracted more than 3 million participants, Mitchell said. Borrowers with higher incomes pay back at a faster pace than those with lower incomes.
“We hope that by publicizing these repayment plans, we will put borrowers into the program that best suits them,” he said.
According to the Student Aid Bill of Rights, every student should have access to a quality, affordable education, the resources to pay for college, the right to an affordable payment plan and the right to quality customer service.
Obama signed a presidential memorandum for his Student Aid Bill of Rights yesterday, which is an executive order directing the Department of Education to make student loan payments more affordable and transparent.
“(The Student Aid Bill of Rights) outlines simple values we want everyone to sign up for,” Obama said. “We want congressmen to sign up, legislators and governors to sign up, administrators and college presidents and students to sign up.”
The bill includes developing a process for borrowers to file federal student aid complaints, which will be running by July of 2016, Duncan said. The bill will also require banks to provide better information to borrowers and will create a more centralized way to repay loans.
This centralized and simple system involves an integrated database that will allow borrowers to view student loan balances and make repayment decisions in one spot, Duncan said.
In addition, Duncan said the department plans to raise the bar for debt collection to make sure the charges to borrowers are reasonable and that collectors help students struggling with repayments.
“It is our responsibility to make sure the 40 million Americans with student loans, which includes many of you, are aware of resources to help them manage their debt,” Duncan said. “We want to do everything we can to be responsive to their needs.
Universities can do their part by utilizing technology more effectively to reduce tuition, Duncan said. The Department of Education is also challenging states to play their role by reinvesting in higher education, which ensure universities do not hike up tuition.
The state of New Jersey plans to invest in higher education with an additional $159 million in aid to colleges and students, according to Gov. Chris Christie's Budget Summary for the 2015 fiscal year.
Overall, an educated workforce is the best way to keep high wage, high-skilled jobs in communities, states and ultimately in the nation, Duncan said. Political leaders of every party should be striving to increase funding, not cut it.
“Capital is mobile and businesses move where they think they can get a good workforce,” Obama said. “We want to make sure when they’re making decisions about where to locate, those decisions are here in the United States.”
Avalon Zoppo is a Rutgers Business School first-year student majoring in pre-business. She is an Associate News Editor at The Daily Targum. Follow her on Twitter @avalonzoppo for more stories.