Students said they are mostly supportive of the Obama Administration’s new “Pay As You Earn” program, which aims to help student loan borrowers better understand and manage their student loan debt.
A majority of students said the new program would reduce the financial burden of student loan debt during the first few years after graduation, after Obama announced the program Tuesday.
Obama’s proposed student loan relief program represents a “real savings that will help … graduates get started in their careers and help them make ends meet,” Secretary of Education Arne Duncan said in a media conference call Wednesday hosted by the White House.
Pay As You Earn would allow 1.6 million student borrowers to spend no more than 10 percent of their discretionary incomes on student loans. Currently, students with federal loans under the Income-Based Repayment Plan can limit their payments to 15 percent of their discretionary incomes.
A nurse who graduates in 2014, earning $45,000 a year and has $60,000 in federal student loans, for example, would pay $239 a month, compared with $358 under the current plan.
Max Martinez, a senior majoring in environmental studies, said the program would help graduates who earn low salaries.
“Students aren’t making that much money fresh out of college nowadays so it’ll reduce the [financial] load for the first few years,” Martinez said. “I hope they push [the percent of discretionary income] down even more.”
Alexis Whalen, a junior majoring in classics, said the new measures would reduce college students’ apprehension about incurring a large amount of debt during college and not being able to pay it off.
“The program would allow students to [attend] college without fear [of being unable to afford loan payments] and would also reduce the load on students’ families,” Whalen said. “It’s so flexible because it gives students the option to repay their loans either fast or slow depending on their starting salaries.”
Gabriela Chiriboga, a sophomore majoring in environmental engineering, said she would not use Pay As You Earn because she prefers to quickly finish off her loan repayments after college.
“Though it would be good to have a little extra money available every month, I would rather prefer finishing off my loan payments as soon as possible,” Chiriboga said. “Just because I have a little more money, doesn’t mean I’ll spend more.”
The Obama administration plans to bypass Congress and implement Pay As You Earn at the beginning of next year.