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Will It Be Possible For The New President To Eradicate Or Even Lessen The Student Loan Problem in Am


According to a recent analysis done by a website, the class of 2015 will have each graduate with $35,051 in student debt on average. This increase in student loan debt has definitely made it an important topic to gain votes by presidential candidates. Although there have been amendments and new initiatives by previous Presidents to improve student aid policies, the student loan situation has only gotten worse. Americans have high hopes from their candidates, but will these candidates be able to solve their biggest problem?

Now when United States Of America is all set to choose its 45th President on November 8, 2016 let’s have a look at changes that previous Presidents have made in order to ease student loan reforms.

Here is the list of last 5 Presidents of United States and their student loan initiatives:

Ronald Reagan- Republican (1981-1989)

Ronald Reagan won the presidential elections in 1980 and promised to reduce college costs by improving financial aid policies .

His first step towards achieving the goal was H.R. 3394. A bill that entitled the Student Loan Consolidation and Technical Amendments Act of 1983. A major provision in this bill is the extension of temporary authority of the Student Loan Marketing Association to consolidate various outstanding student loans into new Guaranteed Student Loans with longer repayment periods.

In 1985 he signed Consolidated Omnibus Budget Reconciliation Act (P.L. 99-272) which changed the definition of default from 120 days delinquent to 180 days delinquent (plus a 90-day claim period)

In 1986 Higher Education Amendments renamed the National Defense Student Loan as the Federal Perkins Loan, created the Supplemental Loan to Students (SLS) for graduate, professional and independent students, added Federal Consolidation Loans, restricted eligibility for Federal PLUS loans to parents of undergraduate students and added exit counseling.

George H W Bush- Republican (1989-1993)

George H W Bush’s Presidency made a series of economic and federal spending policy changes that had secondary effects on student lending and grant programs. He has a fair number of efforts made for easing federal student loans.

In 1990, Omnibus Budget Reconciliation Act signed by George H W Bush made colleges to maintain low cohort default rates to retain institutional eligibility for Title IV federal student aid.

Emergency Unemployment Compensation Act of 1991 (P.L. 102-164) allowed the U.S. Department of Education to garnish up to 10% of disposable income to repay defaulted federal education loans.

In 1993, Congress and President George H.W. Bush increased a variety of federal loan programs’ borrowing limits and implemented unsubsidized loans for students with no demonstrated financial need.

Bill Clinton- Democratic (1993-2001)

President Clinton aggressively pursued a complete overhaul of the federal financial aid system early in his first term.

In 1993, the newly-elected President signed the Student Loan Reform Act of 1993, establishing a target for the conversion of 60% of federally guaranteed student loans to direct loans across the next five years.

Though some have called the conversion to a direct lending program Clinton’s greatest success, the Clinton administration was also able to reduce the interest rates on student loans and, in 1997, enact tax credits for college expenses (Wei & Skomsvold, 2010), equally impressive accomplishments.

He also made changes in Higher Education Acts in 1998 (P.L. 105-244) which changed the definition of default from 180 days delinquent to 270 days delinquent (plus a 90-day claim period), added the extended repayment plan, cut Federal Stafford loan interest rates by 0.80%, provided caps to Federal Consolidation Loan interest rates at 8.25% (rounded at nearest 1/8th of a percent instead of nearest whole percent), repealed the ability to discharge student loans in bankruptcy after 7 years in repayment and established Teacher Loan Forgiveness.

George Bush- Republican (2001-2009)

George W. Bush presidency has two important programs that, though short-lived, further underscored governmental focus on national security and economic competitiveness agendas. In 2006, the U.S. Department of Education began offering Academic Competitiveness Grants (ACG) and the National Science and Mathematics Access to Retain Talent (SMART) Grant Programs. In June 2011, the U.S. Department of Education discontinued the ACG and the SMART Grant programs (U.S. Department of Education, 2013a).

Apart from that Higher Education Reconciliation Act of 2005 (P.L. 109-171) during his tenure created the Federal Grad PLUS loan program, increased annual loan limits without increasing aggregate loan limits, changed the fixed interest rate on the Federal PLUS loan from 7.9% to 8.5% (but only for the FFEL program, not the Direct Loan program) effective from July 1, 2006, cut Federal Stafford loan fees from 4% to 1%, repealed the early repayment status loophole, increased wage garnishment for defaulted federal education loans from 10% to 15% of income and tried to eliminate the 9.5% floor income guarantee.

In 2008 the Ensuring Continued Access to Student Loans Act increased annual and aggregate unsubsidized Stafford loan limits for undergraduate students, allowed parents to defer Federal Parent PLUS loan payments while the student was in school and for six months after graduation and allowed the U.S. Department of Education to buy FFEL program loans originated from FY 2003 to FY 2008.

Barack Obama- Democratic (2009-present).

President Obama had set a national goal that by 2020, America will once again have the highest proportion of college graduates in the world. But increasing student debt was making this goal difficult to achieve. To make this possible he came up with Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) which removed the Federal Family Education Loan (FFEL) program, effective July 1, 2010, and created the Pay-As-You-Earn repayment plan, effective for new borrowers as of July 1, 2014.

President Obama used his regulatory authority to fast-track implementation of the Pay-As-You-Earn repayment plan, making it available to borrowers with at least one loan disbursed on or after October 1, 2011 and no loans disbursed prior to October 1, 2007.

Budget Control Act of 2011 (P.L. 112-25) eliminates subsidized Federal Stafford loans to graduate and professional students, effective July 1, 2012, eliminated the up-front fee rebate in the Direct Loan program and implemented sequestration (which leads to increases in the fees on Federal Stafford and Federal PLUS loans).

Bipartisan Student Loan Certainty Act of 2013 (P.L. 113-28) switched Federal Stafford loans and Federal PLUS loans from fixed rates to hybrid fixed/variable interest rate formulas where interest rates remain fixed, but each year’s new loans disbursed on or after July 1 are at a new fixed rate based on the last 10-year Treasury rate in May.

In 2015 Obama introduced REPAYE which Opened up PAYE to 5+ Million More Americans.

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