Snap-O Fact #36
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President Obama proposed capping the maximum amount students must pay on student loans as a percentage of their income.


On March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act, which expands the income-based repayment plan for federal student loans and caps the maximum amount students must pay on student loans as a percentage of their income. For new borrowers after July 1, 2014, the law includes what President Obama proposed when he stated, “Let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.” The Health Care and Education Reconciliation Act also expands funding for the Pell Grant program, community colleges, and minority serving institutions by eliminating the fees paid to private banks to make student loans. Since July 1, 2010, the federal government has been originating student loans through the Direct Loan program. According to FactCheck.Org, those who oppose the program claim it will jeopardize more than 30,000 private sector jobs, but the FactCheck.Org found “that figure to be a stretch;” many banks will still service outstanding loans and may bid to service the new loans originated by the federal government.
 
Sources: 

“Ensuring That Student Loans Are Affordable,” White House, n.d. Web. 9 Dec. 2011
http://www.whitehouse.gov/issues/education/higher-education/ensuring-that-student-loans-are-affordable

Health Care and Education Reconciliation Act of 2010, Public Law 111–152, 111th Cong. (March 30, 2010), http://www.govtrack.us/congress/bill.xpd?bill=h111-4872.

“Making Higher Education More Affordable” (video clip), YouTube, 30 Mar. 2010. Web. 9 Dec. 2011.
 http://www.youtube.com/watch?v=2l-GMYpzf5Q

“Obama Signs Overhaul of Student Loan Program,” New York Times, 30 Mar. 2010. Web. 9 Dec. 2011, http://www.nytimes.com/2010/03/31/us/politics/31obama.html

“Signing health bill, Obama touts student loan fix,” Washington Times, 30 Mar. 2010. Web. 9 Dec. 2011, http://www.washingtontimes.com/news/2010/mar/30/signing-health-bill-obama-touts-student-loan-fix/.

“Student Lenders’ Slippery Jobs Numbers,” FactCheck.org, 25 Mar. 2010. Web. 9 Dec. 2011,
http://www.factcheck.org/2010/03/student-lenders-slippery-jobs-numbers/.

“Summary of the Health Care and Education Reconciliation Act,” DPC.senate.gov, Democratic Policy Committee, 9/10/10. Web. 9 Dec. 2011, http://dpc.senate.gov/healthreformbill/healthbill61.pdf.