Obama uses executive authority to ease student loan burdens

Critics say move fails to address real problem

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President Obama on Monday used his executive authority to offer college graduates some relief from crushing student loan debt and took pointed shots at Republicans, whom he again accused of favoring oil companies and billionaires over America’s struggling middle class.

Monday’s actions, designed to allow more debt-burdened recent graduates to cap their loan payments at 10 percent of monthly income, set the stage for a fight on Capitol Hill later this week, as Sen. Elizabeth Warren and fellow Democrats push a more sweeping overhaul to the college loan system.


SEE ALSO: BURKE: Elizabeth Warren leaves taxpayers on hook for more student loan subsidies


Congressional Republicans, meanwhile, blasted the White House for pushing a small, targeted measure while failing to address the broader challenge — lowering the cost of college and expanding the economy, giving more young Americans the financial capability to continue their education.

In remarks in the East Room of the White House, Mr. Obama acknowledged that his actions have limits. He urged Congress to pass the loan reform package pushed by Ms. Warren, Massachusetts Democrat, and others in her party, even though that proposal — which includes significant tax increases — would face certain death in the House and may not even clear the Democratic-controlled Senate.

In trying to turn the tide on Capitol Hill, the president returned to a familiar theme — shaming Republicans while calling on the rich to pay more in taxes.

“You would think that if somebody like me has done really well, in part because the country’s invested in them, that they wouldn’t mind at least paying the same rate as a teacher or a nurse. There’s not a good economic argument for it, that they should pay a lower rate. It’s just clout, that’s all,” Mr. Obama said. “It’s bad enough that that’s already happening. It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started with their lives.”

Ms. Warren’s proposal would go much further than the steps taken by Mr. Obama on Monday. Her bill would allow many borrowers to refinance their old student loans under current interest rates, and would pay for the money lost to the federal government by raising taxes on the wealthy.

Republicans quickly launched a two-pronged counter attack, simultaneously blasting both Ms. Warren’s larger proposal and the more targeted steps taken by the president.

“If he’s serious about helping reduce student loan debt, the president should call on Senate Democrats to stop blocking our jobs bills so he can sign them into law,” said House Speaker John A. Boehner, Ohio Republican.

Rep. Tom Petri, Wisconsin Republican and a senior member of the House Education Committee, said the idea of affordable college repayment plans is a good one, but the administration’s approach is too complex and confusing.

Data seem to back up his contention. The U.S. Department of Education already offers repayment options that allow many borrowers to cap their monthly payments, but fewer than 2 million — out of about 40 million Americans total with student loan debt — have signed up.

“The president’s proposal moves us in the wrong direction by taking a complicated, expensive repayment option and simply expanding it,” Mr. Petri said.

William Hubbard, spokesman for the Student Veterans of America, said his group was “not ready” to endorse Mr. Obama’s move, but praised the president endorsement of the Warren bill. He said that bill, and a separate bill aiding veterans facing college bills, could provide relief for his members.

Mr. Obama’s executive action specifically does three things: directs Education Secretary Arne Duncan to expand the loan repayment program to more borrowers by December 2015; requires private companies such as Sallie Mae to offer young Americans the proper “customer service and support and financial flexibility that they deserve;” and calls on the Department of Education and other arms of the federal government to work more closely with students so they are aware of their borrowing options.

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