DENVER (Reuters) - President Barack Obama vowed on Wednesday to take steps to ease the burden of student loans, potentially helping cash-strapped college graduates in a tough U.S. economy.
“I want America to have the most highly skilled workers doing the most advanced work. I want us to win the future,” Obama told an audience of about 4,000 students at the University of Colorado-Denver.
“So that means we should be doing everything we can to put a college education within reach for every American.”
In line with an announcement on Tuesday, Obama said he planned to speed up a plan to cap student loan payments at 10 percent of income, bringing it forward to start in 2012 instead of 2014.
The White House estimates the loan changes could cut monthly payments for 1.6 million graduates.
Americans owe more on student loans than on outstanding credit card debt, and total loans outstanding are slated to exceed $1 trillion this year, according to the Federal Reserve Bank of New York.
The rise in private student lending and growing debt defaults have also been highlighted by Occupy Wall Street protesters.
Under the plan, student debt will also be forgiven after 20 years, compared with 25 years under current law.
More than 36 million Americans have federal student loan debt, but only 450,000 have taken advantage of the existing income-based repayment program.
Obama will also make changes to allow 6 million students to bundle together certain federal loans to allow a single monthly payment. The move would reduce the risk of default caused by juggling several debts.
The option will be open from January. Those that take it up will also get a 0.5 percentage point cut in the interest rate on some of their loans, lowering monthly payments and potentially saving them hundreds of dollars in interest.
The loans initiative was the third such move by Obama in as many days, following action to aid homeowners and boost hiring of military veterans. The White House wants to show Obama is an activist president battling a “do-nothing” Congress.
The loan changes do not require approval by Congress.
Republican lawmakers blocked a $447 billion jobs plan put forward by Obama last month, citing among other reasons its increases in some taxes.
Students helped push Obama into the White House in 2008. As he campaigns for re-election in 2012, Obama’s public approval ratings have fallen near 40 percent, the low of his presidency, largely because of discontent with his economic stewardship.
Obama was wrapping up a swing through western states that will be vital to his re-election campaign in 2012.
Writing by Ian Simpson; Editing by Jerry Norton