June 11--An estimated 742,000 New Jersey residents would be able to lower payments on their federal student loans if Congress approves a measure touted as a way to ease the impact of severe debt on young Americans, according to a White House report.
Nearly 95,000 more New Jerseyans could benefit from a program that President Obama expanded this week allowing borrowers pay back no more than 10 percent of their income on outstanding loans. The White House says the reductions are needed to make sure college is accessible to students as more jobs require higher education, even as some critics argue that it would cost taxpayers too much.
The program caps payments at no more than 10 percent of income. The order expands the program to include students who borrowed before October 2007, which the White House said could help nearly 5 million more borrowers.
The average tuition at a public four-year college has more than tripled in three decades, with 71 percent of students with a bachelor's degree graduating with debt averaging $29,400, according to the report. An estimated 1.2 million people in New Jersey owe a combined $28.5 billion in federal student loans.
The report by the White House Domestic Policy Council and Council of Economic Advisers was released Tuesday -- a day before the Senate was scheduled to vote on loan refinancing legislation.
The legislation sponsored by Sen. Elizabeth Warren, D-Mass., and endorsed by Obama would allow students to refinance their loans at lower interest rates now offered to new borrowers. The measure would help up to 25 million Americans, saving the average borrower about $2,000 over the life of his or her loan, according to the White House report.
The refinancing portion of the bill would increase federal spending by about $51 billion from 2015 to 2024, according to the Congressional Budget Office. The bill also includes a new minimum tax for people who earn between $1 million and $2 million, which would raise about $72 billion to offset the cost.
Republicans, who largely oppose millionaire tax hikes, criticized the proposal as doing nothing to address soaring tuition prices. Other critics say there isn't enough awareness about existing programs. Obama has ordered the Education and Treasury departments to work with lenders to raise awareness of repayment options.
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