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University of Montana students walk around the Oval between classes on in September 2013.

SOPHIE DANISON/Missoulian

A teacher earning $39,000 on the job who carries a student loan debt of $26,500 can now reduce her payments by more than $1,500 a year, under an executive order signed this week by President Barack Obama.

On Tuesday, the White House upped its efforts to help 25 million other student loan borrowers deal with the burden of college debt by releasing a new report, “Taking Action: Higher Education and Student Debt.”

The report provides more detail on the changing landscape of higher education and student debt, and includes new information on how borrowers are affected in each state, including Montana, where 139,000 former students hold a combined debt of more than $3 billion.

While the issue is debated in Washington, D.C., Bill Johnston, president and CEO of Alumni Relations at the University of Montana and the school’s lobbyist, said state education leaders have long been concerned about the growing debt load incurred by students.

“The legislators, governor and regents have all worked together to keep tuition down as much as possible, and they’re concerned about student debt,” he said. “The one thing about Montana, the in-state tuition is right in the middle of our peers, but the percent of our disposable income isn’t as high as elsewhere in the nation.”

Attending college in Montana remains less than in most other states. But because Montanans don’t earn as much, the percent they pay toward education increases, and loans are tougher to pay off.

That’s at the crux of the debate in Congress, where Senate Democrats are pushing for a new bill to allow borrowers to refinance outstanding student loans at a lower rate.

Some economists have argued that the growing number of defaults and missed payments are hurting the nation’s economy. What’s more, students saddled with significant college debt can’t buy cars or houses, serving as another economic drag.

Johnston agrees with the concern as it applies to Montana.

“We’ll see people need to leave the state to be able to have the salary they need to repay their loans,” he said. “Earning a college degree remains a good investment, but at the same time, the debt does limit their options.”

During a Tuesday press call, Cecilia Munoz, the White House director of the Domestic Policy Council, said the average college graduate holds nearly $30,000 in debt, and Americans now owe more on student loans than on credit cards.

In Montana, 139,000 borrowers hold a combined debt of more than $3 billion. Loan refinancing would help 81,000 of them reduce their payments and save money over the term of their loan, according to the White House report.

“The national trend of big loans is only 20 to 30 years in the making,” Johnston said. “People have always borrowed to go to school, but now the majority of tuition is paid by the student, not the state.”

Kevin McRae with the Montana University System said that the while Obama’s executive order remains politically controversial, the state will continue working to hold down the cost of higher education, improve financial literacy among students, and work to prevent loan defaults.

“Our intentions are to keep moving forward as we have for some time on the issue of affordability and student financial literacy,” said McRae. “If we can be as successful as we want to be in those areas, in some ways, the executive order will have minimal impacts because our students will be succeeding in their education cost burden.”

Reporter Martin Kidston can be reached at 523-5260, or at martin.kidston@missoulian.com.

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