President Barack Obama's new measures designed to ease student-loan burdens won't cost taxpayers more money and won't require congressional approval, Education Secretary Arne Duncan said Wednesday.
The president's new initiatives aim to cut student-loan burdens by allowing borrowers to cap their loan payments to 10 percent of discretionary income a year staring in 2012, down from 15 percent today.
New measures will also allow borrowers to consolidate federal loans to lower interest payments as well.
Taxpayers can breathe a sigh of relief, as they won't be asked to pay more, Duncan told reporters on a conference call.
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The proposals come in wake of past administration efforts channel more money to Pell grants instead of using federal funds to subsidize banks and encourage education lending.
"I think it's very important for people to understand that the Pell grant increases that we were already able to get with Congress, $40 billion, as well as the announcements we are making today, all of that we were able to do without going back to taxpayers simply by stopping subsidies to banks and literally cutting out the middle man and making direct loans ourselves," Duncan said.
The administration's moves won't require a congressional green light either.
"We have the executive authority to do this. We wish Congress was moving faster. Unfortunately, Congress is struggling these days," Duncan said.
The move comes at a time when costs for higher education are rising, forcing some to forgo continuing their education beyond high school or others to forgo meaningful but less lucrative occupations such as teaching or nonprofit work.
A new report on tuition costs from the College Board shows that average in-state tuition and fees at four-year public colleges rose by $631 this fall, or 8.3 percent, compared with a year ago.
Nationally, the cost of a full credit load has passed $8,000, an all-time high, the government reports.
Making student loans more manageable will hopefully keep more younger Americans enrolling in higher learning institutions.
"College continues to be a great investment. We've done everything we can to help on the front end as we did last year simply by stopping subsidizing banks and putting that money into increasing Pell grants," Duncan said. "We were able to raise maximum Pell grant levels to about $5,550, and that's $40 billion over the next decade," Duncan said.
"Some folks in Congress would like to see that scaled back, and we think that's absolutely crazy. We think we have to educate our way to a better economy and have to continue to make sure that college is accessible and affordable particularly for families that don't have a lot of economic support."
Other White House officials, often at odds with Congress these days, agree.
"Costs may discourage some potential students from enrolling in college in the first place, keeping them from getting the skills that they need to compete in the global economy," said Melody Barnes, Director of the White House Domestic Policy Council.
"This announcement is part of a series of executive actions to put Americans back to work and to strengthen the economy because we simply can't wait for congressional Republicans to act," said Barnes, who was also on the conference call.
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