June 7 (Bloomberg) -- President Barack Obama said college costs are hindering middle-income families and ordered moves to ease the strain on those dealing with student debt.
Obama issued a presidential memorandum aimed at giving students and parents better access to tools to manage education loan payments and a program that caps payments based on discretionary income.
“I want to make it easier for more students like you to earn a degree without shouldering a mountain of debt,” Obama told students, faculty and local officials at the University of Nevada, Las Vegas campus. “Higher education can’t be a luxury, it’s an economic necessity.”
The president also sought to pressure Congress to pass legislation that would prevent the doubling of interest rates on certain federal student loans on July 1.
Democrats and Republicans disagree over how to fund a measure that would maintain the current 3.4 percent interest rate on subsidized Stafford loans. The administration has said that as many as 7.4 million students and families are at risk of paying more.
As part of a drive to contain college costs, the White House also has won promises from institutions including Syracuse University, Vassar College and the University of Massachusetts system to give new students and parents more information on costs and financial aid.
Debt from educational loans in the U.S. rose 3.4 percent to $904 billion in the first quarter, the Federal Reserve Bank of New York reported May 31. All educational debt, including government and private loans taken out by students and parents, is estimated at $1 trillion, according to the Consumer Financial Protection Bureau.
Secretary of Education Arne Duncan said yesterday that presidential memorandum issued today directs the Education Department to work the Treasury and the Internal Revenue Service to provide better information to students considering financial aid options and graduates who are paying off loans.
“We’re absolutely convinced that a significant percentage of defaults will be averted simply by helping young people better understand their choices and make the right financial decision,” Duncan said on conference call.
The UNLV stop was the final one for Obama on a two-trip to raise campaign cash at events yesterday in San Francisco and Los Angeles.
Nevada is one of the swing states targeted by the campaigns of Obama and Republican Mitt Romney in the November election. Obama won the state with 55 percent of the vote in 2008. The state was hard hit by the recession and the unemployment rate in April was 11.7 percent, the highest among the 50 states. At the end of last year, the state led the country in the portion of homeowners with underwater mortgages, with more than 61 percent of properties worth less than the loan balance, according to CoreLogic.
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