Big changes in the student loan program will help make college more affordable for students and their debt load more manageable after graduation, President Barack Obama says.
After a week when the loan program overhaul passed in the shadow of the healthcare law, the president cited expected benefits for young people: more student lending, caps on those repayments and more money for minority colleges and universities.
Obama is expected to sign the education bill into law Tuesday.
"This reform of the federal student loan programs will save taxpayers $68 billion over the next decade," Obama said in his weekly Internet and radio address Saturday. "And with this legislation, we're putting that money to use achieving a goal I set for America: By the end of this decade, we will once again have the highest proportion of college graduates in the world."
Democrats in the House succeeded in linking the education bill with the healthcare overhaul over stiff Republican objections, giving Obama a series of accomplishments — including an agreement with Russia on nuclear weapons— after a rough and divisive several months.
"To make sure our students don't go broke just because they chose to go to college, we're making it easier for graduates to afford their student loan payments," Obama said.
"The average student ends up with more than $23,000 in debt. So when this change takes effect in 2014, we'll cap a graduate's annual student loan repayments at 10 percent of his or her income."
Under the measure, private banks would no longer get fees for acting as middlemen in federal student loans. The government would use the savings to boost Pell Grants and make it easier for some workers to repay their student loans.
In addition, some borrowers could see lower interest rates and higher approval rates on student loans. Savings are also meant to go toward reducing the deficit and helping to pay for expanded healthcare.
Obama is hoping the health and education initiatives will pay dividends for Democrats in the November congressional elections and improve his own prospects in a presumed 2012 re-election bid. One wrinkle, though, is that most pieces of this week's legislation don't kick in until 2014 — well after the midterm elections and the next presidential election.
Obama said the achievements show "what's possible when we can come together to overcome the politics of the moment, push back on the special interests and look beyond the next election to do what's right for the next generation."
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