Video: Obama outlines student loan relief plan

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    >>> politics and the presidential race. president obama is back at the white house this morning after wrapping up his three- day trip out west. while one of his republican rivals was forced to do a little damage control on wednesday. nbc's kristen welker has more on that. good morning to you.

    >> reporter: good morning. president obama is back to business at the white house today with a full schedule. in denver on wednesday he unveiled a student loan relief program and tried to re-energize one of his core constituencies, young voters.

    >> student loans , the whole four years.

    >> reporter: at the university of illinois at chicago , andrea watson is graduating in december burdened with $40,000 in student debt.

    >> very intimidating and scary to know that before i even get that first real career job i'm just going to have thousands and thousands of dollars over my head .

    >> hello, denver!

    >> reporter: president obama said he will use executive action to speed up a program already approved by congress that could help as many as seven million student loan holders.

    >> college isn't just one of the best investments you can make in your future but one of the best investments america can make in our future, so we want you in school.

    >> reporter: the president's action will allow graduates to consolidate certain federal loans to get lower monthly interest rates and it will cap student loan payments at 10% of a graduate's salary.

    >> knowing that there is a limit on how much they have to repay in a given month that depends on how much they're earning in that month should relieve a lot of people's anxiety about whether they can afford higher education .

    >> reporter: meanwhile, on the gop campaign trail, texas governor rick perry , after earlier questioning president obama 's birth place, did a little damage control saying he has no doubt that president obama is an american citizen . herman cain gave the keynote speech to a tea party rally in texas tuesday and was immediately followed by tea party member apostle claver.

    >> if anybody is a racist it's the democratic party that's the racist.

    >> reporter: in a statement to nbc news a spokesman for cain said in part, our campaign is all about promoting civil dialogue. and responding to a published report that the u.s. state department has purchased over $70,000 worth of books president obama has written, white house spokesman jay carney .

    >> the white house didn't have anything to do with this, and i think it's an embassy by embassy based decision based on what they think is, in buying books, what makes sense for them in terms of advancing american foreign policy interests.

    >> reporter: and gop candidate michele bachmann mailed it in on wednesday, literally mailed in a filing fee and other forms to new hampshire officials so her name can appear on the primary ballot there. this after five of her paid staffers in new hampshire resigned citing lack of support and poor communication. matt?

    >> kristen welker at the white house this morning, thank you

By
updated 10/26/2011 4:34:04 PM ET 2011-10-26T20:34:04

President Barack Obama recalled his struggles with student loan debt as he unveiled a plan Wednesday that could give millions of young people some relief on their payments.

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Speaking at the University of Colorado Denver, Obama said that he and his wife, Michelle, together owed more than $120,000 in law school debt that took nearly a decade to pay off. He said that sometimes he'd have to make monthly payments to multiple lenders, and the debt meant they were not only paying for their own degrees but saving for their daughters' college funds simultaneously.

"I've been in your shoes. We did not come from a wealthy family," Obama said to cheers.

Story: Another idea for student loan debt: Make it go away

Obama said it's never been more important to get a college education, but it's also never been more expensive. Obama said his plan will help not just individuals, but the nation, because graduates will have more money to spend on things like buying homes.

"Our economy needs it right now and your future could use a boost right now," Obama said.

Obama's plan will accelerate a measure passed by Congress that reduces the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent. He will put it into effect in 2012, instead of 2014. In addition, the White House says the remaining debt would be forgiven after 20 years, instead of 25. About 1.6 million borrowers could be affected.

He will also allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them into one. The consolidated loan would carry an interest rate of up to a half percentage point less than before. This could affect 5.8 million borrowers.

Video: Obama outlines student loan relief plan (on this page)

Student loans are the No. 2 source of household debt. The president's announcement came on the same day as a new report on tuition costs from the College Board. It showed that average in-state tuition and fees at four-year public colleges rose $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.

Student loan debt is a common concern voiced by Occupy Wall Street protesters. Obama's plan could help him shore up re-election support among young voters, an important voting bloc in his 2008 election. But, it might not ease all their fears.

Story: Obama offers mortgage relief on Western trip

Anna Van Pelt, 24, a graduate student in public health at the University of Colorado Denver who attended the speech, estimates she'll graduate with $40,000 in loans. She called Obama's plan a "really big deal" for her, but said she still worries about how she'll make the payments.

"By the time I graduate, my interest rate is going to be astronomical, especially when you don't have a job," Van Pelt said. "So it's not just paying the loans back. It's paying the loans back without a job."

The White House said the changes will carry no additional costs to taxpayers.

Sen. Mike Enzi, R-Wyo., his party's ranking member on the Senate Health, Education, Labor and Pensions Committee, said in a statement that while he supports efforts to help struggling graduates, the president's plan was crafted behind closed doors and "we are left with more questions than answers."

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Last year, Congress passed a law that lowered the repayment cap and moved student loans to direct lending by eliminating banks as the middlemen. Before that, borrowers could get loans directly from the government or from the Federal Family Education Loan Program; the latter were issued by private lenders but basically insured by the government. The law was passed along with the health care overhaul with the anticipation that it could save about $60 billion over a decade.

The change in the law was opposed by many Republicans. At a hearing Tuesday, Rep. Virginia Foxx, R-N.C., who chairs a subcommittee with oversight over higher education, said it had resulted in poorer customer service for borrowers. And Senate Republicans issued a news release with a compilation of headlines that showed thousands of workers in student lending, including those from Sallie Mae Inc., had been laid off because of the change.

Today, there are 23 million borrowers with $490 billion in loans under the Federal Family Education Loan Program. Last year, the Education Department made $102.2 billion in direct loans to 11.5 million recipients.

_____

Hefling reported from Washington. Associated Press writer Kristen Wyatt contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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