WASHINGTON — President Obama is devoting much of his week to the rising costs of student loans, starting Monday with a package of proposals designed to make re-payments easier.
Flanked by students gathered at the White House, Obama authorized expansion of a program that lets borrowers cap monthly loan re-payments at 10% of income.
The president also criticized congressional Republicans for what he described as backing tax breaks for the wealthy while opposing plans to reduce interest rates on college loans.
"If you're a big oil company, they'll go to bat for you," Obama said. "If you're a student, good luck."
Critics of the president said his plans would do nothing to address the bigger problem — the rising cost of college itself — and accused him of pandering to young voters (and their parents) in a congressional election year.
They also noted that the Obama administration did not provide cost estimates for the plans.
"Today's much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education or improve access to federal student loans," said House Speaker John Boehner, R-Ohio. "Nor will it help millions of recent graduates struggling to find jobs in the Obama economy."
Obama will continue his student loan push Tuesday by taking questions on the social media site Tumblr. The president's week also features a pair of commencement addresses, Wednesday at Worcester Technical High School in Massachusetts and Saturday at the University of California-Irvine.
During Monday's event at the White House, Obama also endorsed a student loan proposal by Sen. Elizabeth Warren, D-Mass. It would basically allow people to repay private loans through government loans offered at lower interest rates, and Obama again contrasted the plan with what he called Republican economic policy.
"Lower tax bills for millionaires or lower student loan bills for the middle class?" Obama said. "This should be a no-brainer."
Republicans have vowed to block what Sen. Lamar Alexander, R-Tenn., called a "political stunt" that amounts to giving some former students a $1-a-day subsidy while raising taxes and increasing the debt for other Americans.
"Under existing law," Alexander said, "those students already can lower their monthly payments more than the Senate Democrats' $1-a-day scheme would — without raising taxes and the debt."
Obama's rule changes would cover only those with loans from the federal government, not private financial institutions.
The president signed an order directing the Education Department to expand an existing plan that lets borrowers repay no more than 10% of their income each month. Currently restricted to those who began borrowing after October 2007, the "Pay As You Earn" program will eventually cover all borrowers under Obama's order.
Obama also directed the government to try to renegotiate contracts with private lenders, to help students avoid default, and to work with business groups to spread the word about tax benefits and other options that can help people repay their student loans.
Noted the president: "The average borrower at a four-year college owes nearly $30,000 by graduation day."
Administration officials did not provide a cost estimate to Obama's plans.
"We actually don't know the cost yet," said Education Secretary Arne Duncan. "Obviously, we have to go through this regulatory process, so we'll figure that out on the back end."
Douglas Holtz-Eakin, an economic adviser to Sen. John McCain, R-Ariz., questioned the benefits of the new Obama plans, saying that the goal of student loan programs should be designed to help young people get loans in the first place so they can get into college. He also noted that "the taxpayers are going to have to pick up the tab one way or another" in changing the rules of federal loans.
"It feels like election-year politics and not much more," said Holtz-Eakin, now president of a center-right think tank called the American Action Forum.
The expanded "Pay As You Earn" program — capping loan payments at 10% of income — would not apply to those who consolidated federal and private loans through a private lender.
Mary Johnson, a director of financial literacy and financial aid policy at the company Higher One, said many college loans borrowers will still benefit.
"One of the challenges is to get the word out," Johnson said. "A lot of students don't know about it."