Obama signs measures to ease student debt
By Jeong Park
June 9, 2014 1:00 p.m.
On Monday, President Barack Obama signed a series of executive actions to make student loans more affordable.
The measures will give five million students the ability to cap their loan payments at 10 percent of their incomes. As part of the actions, the U.S. Department of Education will renegotiate contracts with federal loan servicers to offer financial incentives for companies that help borrowers repay their loans on time. The Treasury secretary and the Education secretary will also work with tax firms and business groups to educate borrowers about their options.
In a speech signing the measures, Obama said students should receive the full support they need when paying off their loans.
“No hardworking young person should be priced out of a higher education,” Obama said.
Currently, students who took out their first loan after October 2007 and continued to take out loans after October 2011 are eligible for the Pay As You Earn plan, which launched in late 2012 and lets students pay at most 10 percent of their incomes. The executive action will also cover students who do not fall under this category.
Under the Pay As You Earn plan, student loans will be forgiven after 20 years of payments, or after 10 years of payments if students work in public service.
The action comes the same week that Congress plans to vote on a bill that would allow students to refinance their loans at a lower rate. Obama has endorsed the bill and has said Congress needs to take more actions to make college education more affordable. University of California President Janet Napolitano also urged Congress to pass the bill, saying the UC is supporting bills that make student loan debt manageable.
Compiled by Jeong Park, Bruin senior staff.
