President Barack Obama Attempts to Reduce Federal Student Loan Debt

Easing the burden on college students who want the American Dream.According to President Barack Obama, the "surest pathway into the middle class is by way of some form of higher education."  But he says the price students have to pay to get there is putting too many of them and their families deeper into debt. On Monday, June 9, President Obama signed an executive order for students who have federal direct loans. Now their payments will be no more than ten percent of their monthly income.

Robert Muhammad, director of financial aid of Winston-Salem State University, believes this is a step in the right direction. He also says the national rhetoric needs to change. “Many of the students graduating now entered into higher education just as we (nationally) began to experience the housing bubble and the financial collapse," says Muhammad. "I think as they graduate, they find themselves unemployed or under employed and under these immense debts. Meanwhile, we're still hearing from our politicians that higher education is the end all to students as far as finding a way to be a part of the American Dream.” In 2012, Muhammad says the average undergraduate debt was $27,500. The average debt for graduate students was almost $169,000.

President Obama's executive order also extends the ten percent cap benefit to students who borrowed federal dollars before October 2007 or after October 2011. Monthly payments will be set on a sliding scale based upon income. Over the next few weeks, U.S. Senators are expected to debate this issue on Capitol Hill. Muhammad believes they can get creative and offer more financial relief options to college students.

“It would be along the lines of working in healthcare, education, emergency service or police work, where you'd have loan forgiveness opportunities versus having to refinance loans," explains Muhammad. "But if refinancing is something we have to do, it's not a bad idea.” The U.S. Department of Education is expected to make the 10 percent cap plan available to borrowers by December 2015.