President Obama Speaks on Student Loan Debt


The President: Thank you, everybody. Thank you, everybody have a seat. Welcome to the White House. And I want to thank Andy for
the terrific introduction. And this is commencement
season, and it’s always a hopeful and exciting
time, and I’ll bet we might have some folks who just
graduated here today. Raise your hands. Let’s see — yes, we’ve
got a couple of folks who are feeling pretty good. (laughter) Of course, once the
glow wears off, this can be a stressful time
for millions of students. And they’re asking
themselves, how on Earth am I going to pay off
all these student loans? And that’s what we’re
here to talk about. And Andy I think gave a vivid
example of what’s going through the minds of so many young
people who have the drive and the energy and have
succeeded in everything that they do but because
of family circumstances have found themselves
in a situation where they’ve got significant debt. Now, we know, all of you know,
that in a 21st century economy, a higher education is the
single best investment that you can make in
yourselves and your future, and we’ve got to make sure
that investment pays off. And here’s why: For
51 months in a row, our businesses have
created new jobs — 9.4 million new jobs in total. And over the last year,
we’ve averaged around 200,000 new jobs every month. That’s the good news. But while those at the top
are doing better than ever, average wages have
barely budged. And there are too many
Americans out there that are working harder
and harder just to get by. Everything I do is aimed towards
reversing those trends that put a greater burden on the middle
class and are diminishing the number of ladders to
get into the middle class, because the central
tenet of my presidency, partly because of the story of
my life and Michelle’s life, is this is a country where
opportunity should be available for anybody — the idea
that no matter who you are, what you look like, where you
come from, how you were raised, who you love, if you’re
willing to work hard, if you’re willing to live
up to your responsibilities, you can make it here in America. And in America, higher
education opens the doors of opportunity for all. And it doesn’t have to be a
four-year college education. We’ve got community colleges,
we’ve got technical schools, but we know that some
higher education, some additional skills is
going to be your surest path to the middle class. The typical American with a
bachelor’s degree or higher earns over $28,000 more per
year than somebody with just a high school education
— 28 grand a year. And right now, the
unemployment rate for workers with a bachelor’s degree
is about half of what it is for folks with just
a high school education. So you know that this
is a smart investment. Your parents know this
is a smart investment. That’s why so many of them made
such big sacrifices to make sure that you could get
into college, and nagged you throughout your
high school years. Here’s the problem: At a
time when higher education has never been more
important, it’s also never been more expensive. Over the last three decades,
the average tuition at a public university
has more than tripled. At the same time, the
typical family’s income has gone up just 16 percent. Michelle and I both went to
college because of loans and grants and the
work that we did. But I’ll be honest with
you — now, I’m old, I’ve got to admit — (laughter) — but when I got out of
school, it took me about a year to pay off my entire
undergraduate education. That was it. And I went to a private
school; I didn’t even go to a public school. So as recently as
the ’70s, the ’80s, when you made a
commitment to college, you weren’t anticipating that
you’d have this massive debt on the back end. Now, when I went to law school
it was a different story. But that made sense because
the idea was if you got a professional degree
like a law degree, you would probably be
able to pay it off. And so I didn’t feel sorry
for myself or any lawyers who took on law school debt. But compare that experience
just half a generation, a generation ago to what
kids are going through now. These rising costs have
left middle-class families feeling trapped. Let’s be honest:
Families at the top, they can easily save
more than enough money to pay for school
out of pocket. Families at the bottom
face a lot of obstacles, but they can turn to
federal programs designed to help them handle costs. But you’ve got a lot of
middle-class families who can’t build up enough savings,
don’t qualify for support, feel like nobody is
looking out for them. And as Andy just
described vividly, heaven forbid that the equity
in their home gets used up for some other family
emergency, or, as we saw in 2008, suddenly home
values sink, and then people feel like they’re left
in the lurch. So I’m only here because
this country gave me a chance through education. We are here today because
we believe that in America, no hardworking young
person should be priced out of a higher education. This country has always made
a commitment to put a good education within the reach
of young people willing to work for it. I mentioned my generation,
but think about my grandfather’s generation. I just came back from Normandy,
where we celebrated D-Day. When that generation of young
people came back from World War II, at least the men,
my grandfather was able to go to college on the GI Bill. And that helped build the
greatest middle class the world has ever known. Grants helped my mother raise
two kids by herself while she got through school. And she didn’t have
$75,000 worth of debt, and she was raising two
kids at the same time. Neither Michelle or I
came from a lot of money, but with hard work, and help
from scholarships and student loans, we got to go
to great schools. We did not have this kind of
burden that we’re seeing, at least at the
undergraduate stages. As I said, because
of law school, we only finished paying off
our own student loans just 10 years ago. So we know what many of you are
going through or look forward — or don’t look forward to. (laughter) And we were doing it at the
same time — we already had to start saving for
Malia and Sasha’s education. But this is why I feel
so strongly about this. This is why I’m
passionate about it. That’s why we took on a student
loan system that basically gave away tens of billions of
taxpayer dollars to big banks. We said, let’s cut
out the middle man. Banks should be making
a profit on what they do, but not off the
backs of students. We reformed it; more money
went directly to students. We expanded grants for
low-income students through the Pell grant program. We created a new
tuition tax credit for middle-class families. We offered millions of young
people the chance to cap their student loan payments at 10
percent of their income — that’s what Andy
was referring to. Michelle right now is working
with students to help them “Reach Higher,” and overcome the
obstacles that stand between them and graduation. This is something we
are deeply invested in. But as long as college
costs keep soaring, we can’t just keep throwing
money at the problem. We’re going to have to
initiate reforms from the colleges themselves. States have to invest
more in higher education. Historically, the reason we had
such a great public education system, public higher education
system was states understood we will benefit if we
invest in higher education. And somewhere along the
line, they started thinking, we’ve got to invest
more in prisons than we do in higher education. And part of the reason that
tuition has been jacked up year after year after
year is state legislators are not prioritizing this. They’re passing the
costs onto taxpayers. It’s not sustainable. So that’s why I laid out a plan
to shake up our higher education system and encourage
colleges to finally bring down college costs. And I proposed new rules to make
sure for-profit colleges keep their promises and train
students with the skills for today’s jobs without
saddling them with debt. Too many of these for-profit
colleges — some do a fine job, but many of them recruit kids
in, the kids don’t graduate, but they’re left with the debt. And if they do graduate,
too often they don’t have the marketable skills they need
to get the job that allows them to service the debt. None of these fights
have been easy. All of them have been worth it. You’ve got some outstanding
members of Congress right here who have been fighting
right alongside us to make sure that we are giving
you a fair shake. And the good news is, more young
people are earning college degrees than ever before. And that’s something
we should be proud of, and that’s something
we should celebrate. But more of them are
graduating with debt. Despite everything we’re
doing, we’re still seeing too big a debt load on
too many young people. A large majority of today’s
college seniors have taken out loans to pay for school. The average borrower at a
four-year college owes nearly $30,000 by graduation day. Americans now owe more
on student loans than they do on credit cards. And the outrage here is that
they’re just doing what they’ve been told
they’re supposed to do. I can’t tell you how many
letters I get from people who say I did everything I was
supposed to and now I’m finding myself in a situation where
I’ve got debts I can’t pay off, and I want to pay them off,
and I’m working really hard, but I just can’t make ends meet. If somebody plays by the
rules, they shouldn’t be punished for it. A young woman named
Ashley, in Santa Fe, wrote me a letter
a few months ago. And Ashley wanted me to
know that she’s young, she’s ambitious, she’s proud
of the degree she earned. And she said, “I am the future”
— she put “am” in capital letters so that I’d
know she means business. (laughter) And she told me that
because of her student loan debt, she’s worried she’ll never
be able to buy a car or a house. She wrote, “I’m not even 30,
and I’ve given up on my future because I can’t
afford to have one.” I wrote her back and
said it’s a little early in your 20s to give up. (laughter) So I’m sure Ashley was
trying to make a point, but it’s a point that all of
us need to pay attention to. In America, no young
person who works hard and plays by the rules
should feel that way. Now, I’ve made it clear
that I want to work with Congress on this issue. Unfortunately, a generation
of young people can’t afford to wait for
Congress to get going. The members of Congress who are
here are working very hard and putting forward legislation to
try to make this stuff happen, but they have not gotten some
of the support that they need. In this year of action, wherever
I’ve seen ways I can act on my own to expand opportunity
to more Americans, I have. And today, I’m going to take
three actions to help more young people pay off
their student loan debt. Number one, I’m directing
our Secretary of Education, Arne Duncan, to give more
Americans who are already making their loan payments a chance
to cap those payments at 10 percent of their income. We call it “Pay As You Earn.” We know it works, because we’ve
already offered it to millions of young people. It’s saving folks like
Andy hundreds of dollars potentially every month. It’s giving graduates the
opportunity to pursue the dreams that inspired them to go to
school in the first place, and that’s good for everybody. And we want more young people
to start their own businesses. We want more young people
becoming teachers and nurses and social workers. We want young people to be in a
position to pursue their dreams. And we want more young people
who act responsibly to be able to manage their debt over time. So we’re announcing steps that
will open up “Pay As You Earn” to nearly 5 million
more Americans. That’s the first action
we’re taking today. The second action is to
renegotiate contracts with private companies like
Sallie Mae that service our student loans. And we’re going to make it
clear that these companies are in the business of helping
students, not just collecting payments, and they owe young
people the customer service, and support, and financial
flexibility that they deserve. That’s number two. Number three — we’re doing more
to help every borrower know all the options that are out
there, so that they can pick the one that’s right for them. So we’re going to work with
the teachers’ associations, and the nurses’ associations,
with business groups; with the YMCA, and non-profits
and companies like TurboTax and H&R Block. And tomorrow, I’m going
to do a student loan Q&A with Tumblr to help spread
the word — you’re laughing because you think, what
does he know about Tumblr? (laughter) But you will recall
that I have two teenage daughters so that I am
hip to all these things. (laughter) Plus I have all these
twenty-somethings who are working for
me all the time. (laughter) But to give even more student
borrowers the chance to save money requires
action from Congress. I’m going to be signing
this executive order. It’s going to make
progress, but not enough. We need more. We’ve got to have Congress
to make some progress. Now, the good news
is, as I said, there are some folks in
Congress who want to do it. There are folks here like
Jim Clyburn, John Tierney, who are helping lead
this fight in the House. We’ve got Elizabeth Warren,
who’s leading this fight in the Senate. Elizabeth has written a bill
that would let students refinance their loans at
today’s lower interest rates, just like their parents
can refinance a mortgage. It pays for itself by closing
loopholes that allow some millionaires to pay a lower tax
rate than middle-class families. I don’t know, by the way,
why folks aren’t more outraged about this. I’m going to take a pause
out of my prepared text. You would think that if somebody
like me has done really well in part because the
country has invested in them, that they wouldn’t mind at
least paying the same rate as a teacher or a nurse. There’s not a good
economic argument for it, that they should
pay a lower rate. It’s just clout, that’s all. So it’s bad enough that
that’s already happening. It would be scandalous if we
allowed those kinds of tax loopholes for the very, very
fortunate to survive while students are having trouble just
getting started in their lives. So you’ve got a pretty
straightforward bill here. And this week, Congress
will vote on that bill. And I want Americans to pay
attention to see where their lawmakers’ priorities lie
here: lower tax bills for millionaires, or lower student
loan bills for the middle class. This should be a no-brainer. You’ve got a group of far-right
Republicans in Congress who push this trickle-down economic
plan, telling hard-working students and families,
“You’re on your own.” Two years ago, Republicans in
Congress nearly let student loan interest rates double for
7 million young people. Last year, they tried
to strip protections from lower-income students. This year, House Republicans
voted overwhelmingly to slash Pell grants and make it harder
for thousands of families to afford college. If you’re a big oil company,
they’ll go to bat for you. If you’re a student, good luck. Some of these Republicans in
Congress seem to believe that it’s just because — that just
because some of the young people behind me need some help, that
they’re not trying hard enough. They don’t get it. Maybe they need to talk to Andy. These students worked hard
to get where they are today. Shanelle Roberson —
where is Shanelle? Shanelle is the first in her
family to graduate from a four-year college. (applause) Shanelle is not
asking for a handout, none of these folks are. They’re working hard. They’re working while
they’re going to school. They’re doing exactly what
we told them they should do. But they want a chance. If they do exactly what
they’re told they should do, that they’re not suddenly
loaded up where they’ve got so much debt that
they can’t buy a house, they can’t think about
starting a family, they can’t imagine starting
a business on their own. I’ve been in politics long
enough to hear plenty of people, from both parties, pay lip
service to the next generation, and then they abandon
them when it counts. And we, the voters,
let it happen. This is something that should
be really straightforward, just like the minimum wage
should be straightforward, just like equal pay for equal
work should be straightforward. And one of the things I want
all the voters out there to consider, particularly
parents who are struggling trying to figure out how
am I going to pay my kid’s college education, take a
look and see who is it that’s fighting for you and your kids,
and who is it that’s not. Because if there
are no consequences, then this kind of irresponsible
behavior continues on the part of members of Congress. So I ran for this office
to help more young people go to college, graduate,
and pay off their debt. And we’ve made some really
good progress despite the best efforts of some in Congress
to block that progress. Think about how much more we
could do if they were not standing in the way. This week, they have a chance to
help millions of young people. I hope they do. You should let them know you are
watching and paying attention to what they do. If they do not look out for you,
and then throw up a whole bunch of arguments that are meant to
obfuscate — meaning confuse, rather than to clarify
and illuminate — (laughter) — then you should
call them to account. And in the meantime,
I’m going to take these actions today on behalf of
all these young people here, and every striving young
American who shares my belief that this is a place where you
can still make it if you try. Thank you, everybody. God bless you. God bless America.

Paul Whisler

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