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President Obama announced a three part plan recently with the aim to make it easier for people to pay their student loans. The plan includes a consumer education campaign on student financial aid, loan consolidation and monthly payments on the basis of income. President’s plans have got mixed reviews.

Obama’s announcement initiated broader conversation on two topics- the need for a personal finance course for students and the cost and benefits of higher education. Our President pointed out that higher education is not just the best investment that can help individuals make their future, but is one of the best investments that help our country take vital strides forward.

It is true that college graduates get higher remuneration and they are less likely to be unemployed. They contribute more to the growth of our economy. However, it is also true that the college cost is not proportionate to people’s incomes. At some point, the college costs become counterproductive.

Student loan is the most crucial tool that helps kids enter a college. Students should make smart decisions about financial aid and college financial before joining a college. The U.S Education Department now requires all colleges to post a net price calculator on their websites, which can help students and their families to understand how much it will cost them to go to schools they are interested in.

President will ask for a college scorecard for all institutions offering graduation programs. The scorecard will provide all the necessary information about the cost of college, number of students completing graduation every year and possible earnings in an easily readable format, so that students and their families will be able to choose a college that is more suitable to their needs, affordably priced and consistent with their career goals.

Student loan debt is a very serious issue and it is crucial to come up with some innovative ways to control the cost of higher education. About one in five adults face the problem of student loan debt. Hence, we should applaud President’s initiatives to ease student loan. It is expected that Obama’s decision to implement income based repayment standards will help people pay their student loans with ease.

Until this announcement, the income based repayment program has not got enough press coverage. Around 1.6 million borrowers are eligible to take advantage of this program. However, only 450,000 are using this option to date. The Administration and Education Department should create awareness among the public about multiple repayment programs for federal student loans.

President Obama is proposing innovative tools to empower students and families to be informed consumers. He is also proposing to start collecting employment and earning information for colleges, so that the students can have more knowledge about the outcomes after completing graduation.

Students and their parents need to seek out as much information about higher education funding options as possible. The income based repayment options and other strategies available for federal loans can help them reduce the risk of student loan debt.