At Occupy Wall Street, between signs about demanding more regulations for banks and less money in politics, another common refrain has focused on the massive student debt load facing young people entering the workforce.
President Obama picked up on that theme and announced a series of student loan reforms in Denver students on Wednesday.
“About 1.6 million Americans could see their payments go down by hundreds of dollars a month and that includes some of the students who are here today,” he announced to a crowd of cheering students in a rousing, campaign-style speech.
But at Zuccotti Park, the reaction of Occupy protesters was much more muted — and cynical.
“There should have been a bailout for people and students when they bailed out the CEOs,” said Paul Moore, an Occupy protester who’s been at the park for over a month. “To hear that he might have done something to help the millions of kids struggling with student loan debt, it might be because he has to reclaim the student base that helped him win in 2008.”
What Obama’s Announcement Changes
Both the president and Occupy Wall Street protesters agree on the scope of the problem. Student loan debt is approaching $1 trillion and already exceeds the total credit card debt in the country. In his Denver speech, Obama laid out how years of student loan payments hurts the overall economy and makes it more difficult for young people to start families, buy homes, and invest in retirement. Occupy Wall Street protesters lament the same thing, but use terms like “wage slavery” and call for wide-reaching student loan forgiveness.
President Obama announced several changes on Wednesday that he’s able to make without further action from Congress. One is a push to help former students refinance their federal student loans. Another change moves up an adjustment that will lower monthly payments based on a graduate's income. Starting in 2012, the payments will decrease from 15 percent to 10 percent of discretionary income. That change had been scheduled to go into effect in 2014.
As it stands now, if enrollees in this income-based repayment program, loans are totally forgiven after making payments for 25 years. That will now be shortened to 20 years next year, instead of 2014, when it was scheduled to go into effect after Congress passed a student loan overhaul last year.
But one of the challenges with the federal income-based payment program is a low participation rate. Only about 450,000 borrowers currently participate, out of 36 million Americans with student loans.
Baruch College Financial Aid Director Steve O’Meara said part of the issue is that for graduating students, impending student loan bills don't immediately register, and they breeze through a required internet-based exit interview with the financial aid office.
“Typically, when a student is graduating, and they're elated, and this is really just another checkbox that they need to complete. It's not necessarily a priority for students,” O’Meara said. “For us, it is.”
Another initiative announced Wednesday by the president is aimed to address this. President Obama wants to make payment and loan information more clear to borrowers with a new outreach effort called Know Before You Owe.
Occupy Protests Call for Loan Forgiveness, Not Lower Payments
But many Occupy Wall Street protesters see the president’s move as trying to harness their energy without doing enough to change the system.
At Zuccotti Park on Wednesday, protester Gil Torres didn't see a way that this was going to help him. He lives in Manhattan, and has more than $100,000 in student loan debt in both federal and private loans from college and law school. He's already defaulted once when he was just out of school, adding tens of thousands of dollars in penalties to the principle he owes. Then, he was laid off from his attorney job three weeks ago and says he is worried.
“It's definitely on my mind,” he said. “It's concerning, and what's going to happen next. It makes me question whether it was even worth going to law school.”
Overall, there was a general sense among protesters that the president was responding to them by focusing on student loans, but some saw the move as Obama just co-opting their message.
“It's really frustrating to see how something that supposed to, in the language of helping us, is not actually doing anything,” said protester Jason Ahmadi. “The people have these real concerns and mobilized to look for real answers, and they make changes that have the language of solving the problem, but actually don't do anything.”
And this gets back at the larger political problem for the president. President Obama was explicit at his Denver rally that he needs the support of young people to pressure Congress to do more, in a call to reignite the kind of enthusiasm he sparked in 2008.
Back then, Ahmadi was just out of college and volunteered for Obama’s campaign in the battleground state of Nevada. This time around, he’s spending that political energy at Zuccotti Park.