Obama Acts To Ease Student Loan Payments
DAVID GREENE, HOST:
This is MORNING EDITION from NPR News. Good morning. I'm David Greene.
RENEE MONTAGNE, HOST:
And I'm Renee Montagne. It's graduation time on college campuses around the country - a time for students and their families to celebrate. But as President Obama noted at the White House yesterday, for many students, it's also a time when the bills start coming due.
PRESIDENT BARACK OBAMA: Once the glow wears off, this can be a stressful time for millions of students, and they are asking themselves - how on earth am I going to pay off all these student loans?
MONTAGNE: To give you an idea, last year, the average twenty-five-year-old had nearly $21,000 in student debt. And while the education may be worth it, those monthly debt payments are weighing on the economy. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: President Obama told an audience in the White House East Room yesterday, colleges has never been more important or more expensive.
OBAMA: The good news is more young people are earning college degrees than ever before. That's something we should be proud of, and that's something we should celebrate. But more of them are graduating with debt. Despite everything we're doing, we're still seeing too big a debt load on too many young people.
HORSLEY: Just ask twenty-seven-year-old Melissa Regele of Omaha. She's paying about $1,000 a month on her student loans. That's a pretty big chunk out of a Catholic school teacher's paycheck.
MELISSA REGELE: When I sent out my little pie graph of how much I spend, my largest allotment is for my student loan.
HORSLEY: Regele's total debt for her Bachelor's and Master's degree exceeds $160,000. She says that's a bit of a roadblock when it comes to thinking about next steps with her boyfriend of four years.
REGELE: We were talking really seriously about marriage right now and trying to decide when that would be feasible for us. And then we think about buying a house and what comes down the road if we ever want to have kids. And it starts to get a little daunting.
HORSLEY: According to the New York Federal Reserve, 30-year-olds with student loans used to have higher rates of homeownership than those without, presumably because their advanced education helped them to earn more money. Since 2012, though, 30-year-olds with student loans have trailed their peers in buying houses. Consumer economist Chris Christopher of IHS Global Insight says that's just one sign that high levels of student debt are a drag on the overall economy.
CHRIS CHRISTOPHER: You finish college and you have all this debt and then you have a harder time getting an auto loan. You know, you can't really afford to buy that house or put a down payment on - the job market's not the best. So it's a little bit of a tight situation.
HORSLEY: Obama proposed some modest relief yesterday. He urged lawmakers to pass a bill letting student borrowers refinance at lower interest rates. And he expanded access to a program letting borrowers cap their monthly loan payments at 10 percent of their income. The refinancing bill is not likely to pass Congress, though. And the expanded payment cap won't take effect for at least a year and a half. Obama says anything that increases young people's financial flexibility could be an economic shot in the arm.
OBAMA: We want more young people to start their own businesses. We want more young people becoming teachers and nurses and social workers. We want young people to be in a position to pursue their dreams.
HORSLEY: Twenty-eight-year-old Ryan Aman dreams of moving out of his parents' house, where he and his wife have been living to save money while making loan payments of nearly $700 a month. The Corvalis, Oregon couple hopes to get their own place sometime next year. But Aman is also looking down the road to another big expense - college tuition for his young son.
RYAN AMAN: I thought it was expensive when I went to school, and it keeps going up. So it's kind of nerve-racking thinking about where it's going to be in 16 years, when our two-year-old goes off to college.
HORSLEY: Obama says eventually the country has to get control over the soaring cost of tuition. Last fall, he proposed a new report card to help students and parents shop for the best value in higher education. The education department says those report cards won't be ready for another year. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.