President Obama on Monday delivered remarks announcing new executive actions aimed at easing the burden of college loan debt, The New York Times reported.
The White House issued a Presidential Memorandum expanding a law that caps borrowers' loan payments at 10 percent of their income and forgives any unpaid debt after 20 years to individuals with older loans – those who borrowed before October 2007 or stopped borrowing by October 2011.
President Obama also directed the Education Department to renegotiate its contract with federal student loan servicers to include incentives for helping borrowers avoid default. The percentage of students defaulting on their loans within two years of graduating reached 10 percent last year, the highest rate in nearly two decades, The Chronicle of Higher Education reported.
Matt Lehrich, a White House spokesman, estimated that an additional five million borrowers would qualify for lower payments under the president's plan.
Monday's announcement comes as Senate Democrats prepare to consider legislation, introduced by Sen. Elizabeth Warren (D-MA), that would allow existing borrowers to lower the interest rate on their student loans. The legislation proposes to fund such a refinancing program by enacting the so-called "Buffett Rule," which would end some tax breaks for millionaires, according to Inside Higher Ed. Obama said that Congress had a choice to either "protect young people from crushing debt, or protect tax breaks for millionaires."
Republicans largely oppose the proposal. In a statement on Sunday, Senator Lamar Alexander of Tennessee, the top Republican on the Senate education committee, rejected the plan as a "political stunt" to give former students money to pay off their loans. "College graduates don't need a $1-a-day taxpayer subsidy to help pay off a $27,000 loan," he said. "They need a good job."
Related Links
White House Fact Sheet
http://www.whitehouse.gov/the-press-office/2014/06/09/factsheet-making-student-loans-more-affordable
The New York Times
http://www.nytimes.com/2014/06/08/us/politics/obama-plans-steps-to-ease-student-debt.html?_r=0
The Chronicle of Higher Education
http://chronicle.com/article/As-Congress-Bickers-Obama/146977
Inside Higher Ed
http://www.insidehighered.com/quicktakes/2014/06/09/obama-set-expand-income-based-repayment-program#sthash.ZmRbjBou.dpbs