Debt Relief Ahead

Picture taken by John Stewart.

Picture taken by John Stewart.

With President Obama’s efforts to drop the rate of repayment of student debt to 10 percent of a graduate’s monthly income, the president is pushing to help students become debt-free citizens, according to the White House.

Klaus Becker, an economics professor at Texas Tech, said he believes this motivation is for the students, and it seems to be a policy for them. Keeping the loan interest rates low is not money lost for the government, he said.

“If students don’t pay as high interest rates on student loans, then they have more disposable income,” he said, “which they will spend on things that stimulate the economy.”

More individuals will attend college and will be better off, Becker said, by giving students a break through lowered interest rates.

• Undergraduate direct subsidized/unsubsidized loan interest rates are 3.86 percent.
• Undergraduate direct subsidized/unsubsidized loan interest rates are increasing in July to 4.66 percent.
• Graduate direct unsubsidized loan interest rates are increasing from 5.41 percent to 6.21 percent by July.
• Direct plus loan interest rates are increasing from 6.41 percent to 7.21 percent.

However, if more people go to college, then the country will have a better prepared workforce, Becker said.

According to the Federal Student Aid website, interest rates are increasing starting next month. Rene Paez Jr., an architecture graduate student from San Antonio, said rates affect him because he is a current student.

“It kind of sucks. New minds trying to get in the work field,” he said, “that’s America’s future.”

From a college student’s perspective, Paez said, the new repayment system looks appealing, but he doesn’t know what it will do for the economy.

“As a person coming out of college, and someone who doesn’t know a lot about the economy and politics, it sounds intriguing,” he said, “but I’m sure there are other angles to consider and to be looked at in terms of our economy.”

Paez said he does not believe it is the right decision to increase student loan interest rates.

With average tuition more than tripling at a public four-year university in three decades, 71 percent of graduates leave school with nearly $30,000 in debt, the White House website revealed.

Minjai Kang, a freshman chemistry and pre-pharmacy major from Dallas, said he did not know it was that big of a repayment.

Pictures taken by John Stewart.

Pictures taken by John Stewart.

Prospective students have a better chance lowering the cost by receiving a Pell grant, which has increased $1,000 since 2008, according to the White House website.

The grant has reached $5,730 for the 2014-15 academic year, the website revealed, and the number of recipients has expanded by half.

The debt of borrowers who decide to take out loans for college, take responsibility for their loans, and make their payments on time, may be forgiven after 20 years, according to the website.

For public service employees with those qualifications, the debt will be forgiven after 10 years, according to the website.

Bobby Gonzales, a junior psychology major from Midland, Texas, said the new policy is beneficial and will help students in the long run.

“That sounds reasonable, not too bad,” he said. “It helps, especially coming right out of college.”

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