WASHINGTON (Reuters) -
President Barack Obama issued an executive order on Tuesday to lessen the burden of student loans, allowing millions of cash-strapped college graduates to breathe a sigh of relief.
Obama's plan is to cap student loan payments at 10 percent of income, bringing it forward to start in 2012 instead of 2014. This way, recent college grads swamped by loan payments can begin to contribute to our faltering economy.
Obama stuck it to Congress when he said, "Steps like these won't take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference,". POW!
Executive orders by the president do not require approval by Congress.
Republican lawmakers blocked a $447 billion jobs plan put forward by Obama in September because it proposed to raise some taxes.
Students helped Obama reach the White House in 2008. As he campaigns for reelection in 2012, Obama's public approval ratings have fallen near 40 percent, the low of his presidency, because people are unhappy with America's economy and his role in bringing us out of this funk.
Americans owe more on student loans than on outstanding credit card debt. According to the Federal Reserve Bank of New York, total loans outstanding are slated to exceed $1 trillion this year!
The rise in private student lending and growing debt defaults have also been highlighted by the Occupy Wall Street protesters.
Obama will announce the student loan measure in Denver on Wednesday as he wraps up a West Coast road trip that will be crucial to his re-election campaign in 2012.
Student debt will also be forgiven after 20 years, compared with 25 years under current law.
Obama will also make changes to allow 6 million students to bundle together certain federal loans to allow a single monthly payment, reducing the risk of default caused by juggling multiple debt obligations. BRILLIANT!
The option will be open in January and those that take it up will also get a 0.5 percentage point cut in the interest rate on some of their loans, lowering monthly payments and potentially saving them hundreds of dollars in interest.
"College graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money by consolidating their debt and capping their loan payments," said Secretary of Education Arne Duncan.
(Reporting by Alister Bull; editing by Todd Eastham, Steven Mullen)