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Framework emerges for how Obama plans to ease student loan burden

Recognizing that college students and recent graduates are facing rising tuition prices and burdensome student loan debt, President Obama on Wednesday announced a plan seeking to lessen the burden of paying back student loans.

Some questions and answers:

>Q: How big a problem is student loan debt?

A: Total outstanding student debt has passed $1 trillion, more than the nation's credit card debt, and average indebtedness for students is rising. The College Board said Wednesday that the average in-state tuition and fees at four-year public colleges rose by an additional $631 this fall, or about 8 percent, compared with a year ago.

The cost of a full credit load has passed $8,000 -- an all-time high. The board said about 56 percent of bachelor's degree recipients at public schools graduated with debt averaging about $22,000. From private nonprofit universities, 65 percent graduated with debt averaging about $28,000.

>Q: What does Obama's plan do?

A: Obama will accelerate a law passed by Congress last year that lowers the maximum required payment on student loans from 15 percent of discretionary income annually to 10 percent for eligible borrowers. It goes into effect next year, instead of 2014. Also, the remaining debt would be forgiven after 20 years, instead of 25. The White House said that about 1.6 million borrowers could be affected.

Obama also will allow borrowers who have a loan from the Federal Family Education Loan Program and a direct loan from the government to consolidate them at an interest rate of up to half a percentage point less.

>Q: How much will it save?

A: Some borrowers will save several hundred dollars a month in payments.

>Q: What's the difference between government-backed student loans and private student loans? And does Obama's plan affect private loan borrowers?

A: Before the law change, borrowers wanting a student loan backed by the government could get loans directly from the government or from the Federal Family Education Loan Program. Those from the Federal Family Education Loan Program were issued by private lenders, but basically backed by the government. The law eliminated the private lenders' role as middlemen and made all such loans direct loans. The law was passed with the overhaul of the health care system, anticipating that it would save about $60 billion over a decade. Private loans are ones that students typically get after they obtain all they can from the government. They're typically from banks, and they are where students tend to get into the most trouble because they don't have the same government protections and they usually have higher rates. Obama's plan won't help students stuck in those.

>Q: Which others won't benefit?

A: Borrowers already in default won't qualify. The accelerated component of the income-based repayment plan only applies to borrowers who take out a loan in 2012 or later and who also took out a loan sometime between 2008 and 2012, according to the Education Department.

>Q: What do Republicans say?

A: Sen. Mike Enzi, R-Wyo., ranking Republican on the Senate Health, Education, Labor and Pensions Committee, said in a statement, , "We are left with more questions than answers." Sen. Lamar Alexander, R-Tenn., a former U.S. education secretary, said that the real way to reduce student loan debt is to slow down the growth of tuition and that the best way to do that is to "reduce health care costs and mandates that are soaking up state dollars that in the past have gone to support public colleges and universities."

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