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June 19, 2014

Obama talks rise of college debt, tuition

Proposes 3-step plan to help students pay off loans

By Emily Scharf

Tuesday, June 10 President Barack Obama sat down in his dining room with David Karp — the founder of Tumblr — for the first-ever Tumblr Q&A addressing the issue of student loan debt in today’s society.

With Tumblr rising in popularity, President Obama said he is hoping that the Q&A session will help spread the word about the actions being taken by the White House to help control the nation’s skyrocketing student loan debt.

According to Karp, a team of influential Tumblr bloggers helped select some of the best questions to ask Obama during the live Q&A session which aired at 4 p.m. He assured the audience that neither the White House nor the President had seen any of the questions in advance.

Tumblr users had the opportunity to send in their questions to ObamaIRL.tumblr.com using the hashtag “ObamaIRL.”

Questions had to be submitted by June 8 for consideration in the Q&A session.

The Q&A session followed a speech from the President entitled “Opportunity for All: Making College More Affordable,” which was made public via the White House Tumblr page on June 10.

During his speech, President Obama discussed the hardships that come with a college education. He stressed the importance of a higher education, saying a typical American with a Bachelor’s degree or higher earns an average of $28,000 more per year than someone with only a high school education.

Because of this, Obama said we need to make higher education more affordable.
“We believe that in America, no hardworking young person should be priced out of a higher education,” Obama said during his June 9 speech. “So that’s why I laid out a plan to shake up our higher education system and encourage colleges to finally bring down college costs.”

Obama noted however, that despite everything they are doing, there is still too big a loan debt on too many young people. The average college loan debt for a borrower at a four-year college is around $30,000. He added that college tuition rates have tripled over the past 30 years, yet typical family income has risen only 16 percent.

According to the Consumer Financial Protection Bureau, student loan debt in the United States has reached a high of $1.2 trillion.

During the Q&A session, President Obama indicated three steps he was taking to help young people pay off their student loan debt: The first, he said, was to give more Americans who are already making their loan payments a chance to cap those payments at 10 percent of their income, or an income-based repayment (IBR).

This program is called “Pay As You Earn,” and was introduced in 2011 — but only applied to loans taken out after 2011. Obama says that “Pay As You Earn” will open up to nearly five million more Americans.

The second step Obama is taking to lessen the burden is to renegotiate contracts with private lenders — like Sallie Mae — that service student loans. He assured the audience that he was going to make it clear that these companies are in the business to help students, not just collect payments.

“They owe young people the customer service, support and financial flexibility that they deserve.”

The third step the President explained he was taking was to work to provide more knowledge to students about all of the options out there so that they can choose the one that is right for them. To help spread the word, he agreed to do this student loan Q&A session with Tumblr.

With college tuition on the rise, more students are taking out more loans in order to afford the cost. Tumblr user Caitlin (marionettes.tumblr.com) said she is appreciative of President Obama’s willingness to work with legislators by creating new repayment plans — which she referred to as putting a Band-Aid on a broken leg — but asks what he is doing to actually lower the cost of tuition.

Obama explained that the main reason college tuition has gone up is because of the lack of state support, saying that state legislators stopped subsidizing public universities as much as they used to and instead started spending that money on prisons, which the President says he thinks is less productive.

“Schools then made up for the declining state support by jacking up their tuition rates,” Obama said in response to the Tumblr user’s question.

Obama explained that within the past 12-16 months, he had convened college and university presidents across the nation to begin working with them on lowering tuition rates.

Cleveland State University President Ronald Berkman said the university is taking initiatives to help lower the rising tuition rates.

“I think that we’ve been on the forefront of helping to lower it [tuition],” Berkman said.
He said the first initiative that Cleveland State is taking is to allow students to take as many credits as they would like with a standard tuition price with the elimination of the tuition band, meaning students can take as many as 18 credits for the same price as if they had taken 12 credits.

Additionally, the university introduced a tuition rebate program to any student that completes 30 credits in good academic standing for three semesters. Qualified students will receive a two percent tuition rebate along with a $200 book allowance.

Berkman expressed that perhaps the most important initiative the university is taking to lower student loan debt is setting the standard degree programs at 120 credits, with the exception of programs that have an accreditation component requiring additional credits.

“The 120 [credit hour] cap can save some students,” Berkman said. “Last year’s students graduated with an average of about 140 credits, so if now they can take 120 credits and finish all the degree programs, that’s 20 less credits that students would have to take.”

Other topics covered in the White House Tumblr Q&A were the growth and promotion of STEM (Science, Technology, Engineering and Math) fields, being stuck between majors and the difficulty of a teenager making a decision between passion or an industry that’s going to have a demand for them.