In breaking education loan news, this afternoon President Obama authorized an executive purchase designed to provide repayment relief to struggling student loan debtors. Obama’s plan attempts to relieve student debt pressures and decrease fails in three primary ways:
- Helps existing debtors lower monthly payments by expanding the particular Pay As You Earn (PAYE) student loan repayment plan to all Federal Direct Mortgage borrowers. Previously restricted to “new” student loan borrowers, defined as those with no federal loan debt as of October 1, 2007 and with at least one mortgage borrowed since October 1, 2011, PAYE will become available to all Federal Immediate Loan borrowers by 2015, a good expansion to about 5 mil additional graduates. PAYE repayment caps monthly minimum payments at 10 percent of a borrower’s discretionary earnings. Get more details on the PAYE repayment plan here .
- Requires the Department of Education to renegotiate contracts with federal education loan servicers such as Sallie Mae. The renegotiated contracts will provide monetary incentives to servicers to provide much better customer service and help borrowers avoid arrears.
- Provides expanded access to student loan repayment and tax motivation information through private sector businesses, professional associations, community groups, tax preparers, and social media. In this particular spirit, President Obama will web host a Q& A on schooling, college access, and reducing education loan debt on Tumblr tomorrow. Queries can be submitted here .
Though not part of the executive order, President Obama also took the opportunity to toss his support behind Senator Elizabeth Warren’s student loan refinance proposal , which would allow graduates with high interest rate student loans to refinance their education debt at today’s lower rates. The bill is expected to be the very best upon by Congress within the 7 days. Read more about Warren’s refinance proposal here .
Leave a comment below to let us know what you consider Obama’s new plan to ease the particular student loan debt burden.