President Promotes New Student Loan Plan After 'Momentous Week' in Capital

In what he called a "momentous week for America," President Barack Obama on Saturday touted "bold reforms" in the student loan program that he said would make college more affordable for millions of young Americans while also saving the government billions of dollars.

In his weekly address, Obama said the student loan overhaul -- part of the reconciliation bill approved Thursday -- would save the U.S. Treasury $68 billion over 10 years by ending subsidies to banks and middlemen as the Department of Education takes over responsibility for the loans. The savings should come as the government stops paying the subsidies it has given to private lending institutions to guarantee risky loans.

"The money saved will help expand and strengthen the federal Pell Grant program," Obama said, referring to grants going to economically disadvantaged students. "The reforms will also cap college graduates' annual student loan repayments at 10 percent of their income, revitalize community colleges and increase support for minority serving institutions."

Pell Grants, which do not have to be repaid, will eventually be doubled, the president said, as part of his 10-year goal for America to produce "the highest proportion of college graduates in the world."

Obama was to spend the weekend at Camp David, the presidential retreat in the Maryland mountains. After celebrating the passage of the health care legislation and the announcement of a new nuclear arms deal with Russia this week, he plans to hit the road on Thursday and Friday for events in Maine, Massachusetts and North Carolina promoting the health reform package.