Starting Out In Life
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Obama's expected to issue an executive action on student loans. "Obama, in executive action coordinated with a legislative push by Senate Democrats, will direct the Department of Education to expand the number of people who can take advantage of a law capping payments on federal direct loans to no more than 10 percent of their monthly incomes....The action marks the latest effort by Obama’s administration to advance policies by executive action after being stymied on Capitol Hill....The president has spent much of this year initiating modest changes in programs that may provide a boost to Democrats in advance of the midterm elections. Obama’s action tomorrow will expand a 2010 law....An additional 5 million people who took out loans before October 2007 or haven’t borrowed since 2011 will be eligible." Phil Mattingly in Bloomberg.
Video: President Obama's weekly address. CBS News.
Elizabeth Warren's own student loan measure faces an uphill battle. "President Obama on Saturday signaled his support for a student loan reform measure proposed by Senate Democrats that could come up for a vote next week....He pointed to a bill proposed by Sen. Elizabeth Warren (D-Mass.), that could come up for a vote as early as Wednesday, as a solution....The bill allows graduates with existing federal loans to refinance those loans at the lower interest rates offered to new borrowers. But the proposal has met significant opposition from Republicans, in part because it pays for an increase in government spending through a new tax on top earners." Alexandra Jaffe in The Hill.
Explainer: How Sen. Warren's measure would work. Max Ehrenfreund in The Washington Post.
Chart: The $1.2 trillion student debt problem, by state. Danielle Douglas in The Washington Post.
The backdrop: Rising debt load and tuition hurts the economy. "Despite past actions by the administration, borrowers’ debt load is growing and retarding the ability to buy homes, start businesses or otherwise spend to spur the economy, economists say....About $1 trillion in federal student loans or loan guarantees is outstanding, on top of more than $100 billion in outstanding private student loans that are not federally guaranteed....While economists argue that a postsecondary education is an investment that pays off, average tuition at four-year public colleges has more than tripled over the past three decades, according to the administration, and 71 percent of those who graduated with a bachelor’s degree carried debt, which averaged $29,400." Jackie Calmes in The New York Times.
Good news for graduates: Your job prospects may be getting better. "May's data on jobs and wages fits with earlier predictions of brighter prospects for the 1.8 million Americans graduating from college with bachelor's degrees this year. A survey done this spring by the National Association of Colleges and Employers showed companies plan to hire nearly 9 percent more college graduates compared with 2013. And the survey also showed employers are boosting starting salaries by 1.2 percent over last year. For those graduates who studied science or engineering, this hiring season looks particularly encouraging. One NACE survey showed petroleum engineers are getting starting pay of more than $95,000 a year." Marilyn Geewax in NPR.
Background reading:
Interest rates are going up for federal student loans. Janet Lorin in Bloomberg.
Default rates on federal loans keep rising. Department of Education.
Student-debt forgiveness plans skyrocket, raising concerns over costs, higher tuition. Josh Mitchell in The Wall Street Journal.
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