On Monday, President Obama issued an executive order aimed at addressing student loan debt while urging Congress to act on legislation that could provide further relief. Here’s some more information about the actions President Obama announced:
- Expansion of “Pay As You Earn”: The President ordered the Secretary of Education to issue regulations that will allow 5 million federal borrows to qualify for this program, which caps monthly student loan payments at 10 percent of a borrowers’ income.
“Number one, I’m directing our Secretary of Education, Arne Duncan, to give more Americans who are already making their loan payments a chance to cap those payments at 10 percent of their income. We call it “Pay As You Earn.” We know it works, because we’ve already offered it to millions of young people. It’s saving folks like Andy hundreds of dollars potentially every month. It’s giving graduates the opportunity to pursue the dreams that inspired them to go to school in the first place, and that’s good for everybody. And we want more young people to start their own businesses. We want more young people becoming teachers and nurses and social workers. We want young people to be in a position to pursue their dreams. And we want more young people who act responsibly to be able to manage their debt over time. So we’re announcing steps that will open up “Pay As You Earn” to nearly 5 million more Americans. That’s the first action we’re taking today,” President Obama.
- Re-negotiate Private Contracts: Direct the Department of Education to re-negotiate contracts with federal loan servicers, such as Sallie Mae, to strengthen financial incentives that will help borrowers re-pay their loans; lower payments when loans enter delinquency or default; and improve customer satisfaction and service for borrowers.
“The second action is to renegotiate contracts with private companies like Sallie Mae that service our student loans. And we’re going to make it clear that these companies are in the business of helping students, not just collecting payments, and they owe young people the customer service, and support, and financial flexibility that they deserve. That’s number two,” President Obama.
- Improve Financial Literacy for College: The Departments of Education and Treasury will work with the private sector to educate families and young people about college financing options during the tax filing process.
“Number three — we’re doing more to help every borrower know all the options that are out there, so that they can pick the one that’s right for them. So we’re going to work with the teachers’ associations, and the nurses’ associations, with business groups; with the YMCA, and non-profits and companies like TurboTax and H&R Block. And tomorrow, I’m going to do a student loan Q&A with Tumblr to help spread the word …,” President Obama
Click here to read the President’s full remarks. For further details, download a fact sheet about the President’s plan from Whitehouse.gov. Also, you can visit Wheelock’s financial aid resources for further tools to help you understand and plan for the college financing process.
About the author:
Julie Bolduc is a graduate student at Boston College Graduate School of Social Work. She previously served as a Massachusetts state lobbyist at Charles Group Consulting, representing nonprofit organizations, associations and groups whose public policy and budget priorities serve the public good. As the Director of Grassroots Advocacy for Horizons for Homeless Children, Julie developed and launched “the Campaign for Young Homeless Children” in 2011. She began her career as an associate at the Dewey Square Group’s Washington DC and Boston offices, managing grassroots campaigns.