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The Racialized $1 Trillion in Student Debt Obama Aims to Ease?

by Julianne Hing, Hatty Lee
colorlines.com
Friday, October 28 2011

Congress may be gridlocked, but that doesn't mean President Obama's hands are tied. On Wednesday the president announced that he's moving to ease Americans' student debt load with an executive order that would save borrowers "hundreds of dollars a month" in student loan payments.

Called the "Pay As You Earn" plan, starting January 2012 people would be able to cap their federal student loan payments at 10 percent of their discretionary income. Any remaining debt would be forgiven after 20 years. This cap was due to take effect in two years, but Obama's moved the timetable up. In his speech at the University of Colorado at Denver, Obama said that the plan, which would also allow students to consolidate their federal student loans under a lower interest rate, could help around 1.6 million Americans ease their monthly bills.

"Let me tell you," Obama told the cheering crowd. "I remember this. I remember writing, like, five different checks to five different agencies and if you lost one that month you couldn't get all the bills together. And if you missed the payment, suddenly you were paying a penalty."

Obama's proposal isn't exactly a new idea, but rather a revision. It's lifted from the IBR, or the income-based repayment plan, which was signed into law in September 2007 by President George W. Bush. Bush's initiative allowed students to cap their federal student loan payments at 15 percent of their discretionary income, and allowed students to walk away from the rest of their debt after 25 years.

But Obama's executive order comes at an especially dire time, when college costs are rapidly increasing and with it, the amount of debt students are taking on in order to pay for school. Among those who borrow to pay for school, students of color are disproportionately saddled with high levels of debt. We rounded up the latest numbers that show exactly how much debt college graduates are carrying around with them these days, and who's in need of relief.

—Julianne Hing

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A comment on this piece from sandela85

This legislation is bad bad bad and students in countries worldwide have opposed income-contingent loan repayment schemes for years.

This simply means that those who owe more and make less (disproportionately racialized folks, indigenous folks and people with disabilities) pay more in their education through interest because they have much larger terms, even if it will be written off after 20 years. In the end, because the system marginalizes these groups of people, we will be forced to pay much more for our education than the average white person without a disability. Isn't it kinda whack that those who are rich end up paying the least because they have no interest to deal with. Yes. That is whack.

Also, in countries where this kind of legislation is in place, it has led to the skyrocketing of tuition fees, as colleges and universities can now claim that no student will be unable to pay; after all, they will never have to pay more than 10% of their income.

Bottom-line: Student loans are an unsustainable tax on the poor.

Education should be free. The passing of knowledge and the process of knowledge discovery shouldn't cost anything. It's necessary for the survival of any society. And knowledge certainly shouldn't be reserved for the minds of the wealthy few.