Photo by:

President Barack Obama unveiled a new executive order plan that will reduce monthly payments of student loans in a speech at the Auraria Campus last Wednesday.

Auraria Campus houses both Metropolitan State College of Denver (MSCD) and University of Colorado-Denver.

The new plan, “Pay as You Earn,” will reduce monthly payments up to 10 percent of discretionary income and forgive loans within 20 years as long as payments are made consistently. The action does not need Congress’s approval and will be done through the executive branch’s broad powers almost immediately starting in 2012.

According to Obama, the plan is meant to ease the burden of student loans by 33 percent, compared to the current system.

“We’ve been in your shoes,” said Obama, while recounting his early days paying off student loans now with First Lady Michelle Obama. “We did not come from a wealthy family.”

The executive power to change the way the Department of Education (ED) deals with its loans is rooted within Article 2, Section 1, Clause 1, of the United States Constitution and can be easily changed if Congress passes legislation against the order, or if a president after Obama decrees it as such.

“We can’t wait for Congressional Republicans to act,” said Obama to a crowd of over 4,000 cheering students in a packed gymnasium. “In a global economy, putting a college education within reach for every American has never been more important, but it’s also never been more expensive. That’s why today we’re taking steps to help nearly 1.6 million Americans lower their monthly student loan payments.”

There are two other portions of the executive order dealing with students. One will require the ED to implement a plan called “Know Before You Owe,” which will create a concise financial aid disclosure form for all students. The second portion will make it easier to consolidate student loans into one cheaper package with an overall reduction in the interest rate by 0.5 percent.

“Sadly, the president has once again chosen to put politics before policy, touting a plan that will do nothing to help the nation’s unemployed workers,” said Republican Chairman of the House Committee on Education and the Workforce John Kline in a statement last Wednesday.

A recent study found that student loans, for the first time ever, surpassed every other form of household debt in the country except for mortgages.

“I like the fact that we are finally going to [be] doing something about it,” said MSCD freshman John Parmakian.

Education Secretary Arne Duncan said the plan has been rated by the ED as debt-neutral and will come at no cost to the tax-payers. 

For more coverage on Obama’s visit, see http://www.duclarion.com/news/obama-makes-politically-charged-speech-at-pepsi-center-fundraiser-1.2669078