By Alison Henderson
Obama announced a plan to reduce student loan debt at a speech in Denver on Wednesday, according to a Washington Post report.
The program will run from January 1 to June 30, 2012 for students that took out their first loan in 2008 and plan to take out another in 2012.
The "Help Americans Manage Student Loan Debt" proposal will allow graduates to cap their federal student loan debt at 10 percent of their discretionary income. Remaining debt on the loans would be forgiven after 20 years.
This is expected to save graduates hundreds of dollars a month, according to the Washington Post report.
Obama's Domestic policy advisor Melody Barnes said that the initiative is a response to a "We the People" petition signed by 30,000 people and submitted to the White House website.
Despite the projected savings, several student loan groups have criticized the proposal, stating that it doesn't address rising tuition and the lack of well-paying jobs, according to a Reuters report.
"By focusing only on a limited group of students, the proposal does little for borrowers struggling to repay student loans in today's distressed job market," said the Education Finance Council in a prepared response.