President Obama just took a small step forward on student debt
The student loan debt crisis affects every American citizen. When the average college kid owes more than $25,000 upon graduating, the likelihood of saving for cars, homes, or other important consumer goods becomes untenable. This impacts our entire economy– not just students.
Yesterday, President Obama took to the podium to discuss the state of student debt in America, and what he would do to try and ease the burden.
The first action is to expand the Pay As You Earn program, allowing about 5 million more students borrowers to participate. This program was previously only available to those who borrowed after October 2007 and kept borrowing by October 2011, but is now open to those who loans are older or who stopped borrowing by 2011. The plan caps monthly student loan payments at 10% of monthly income, and forgives any debts older than 20 years. New applicants will have access to this plan by 2015.
The President also took the chance to call for the passage of Senator Elizabeth Warren’s new bill, which allows student borrowers to refinance at lower rates.
President Obama’s expansion of the P.A.Y.E. program and support for student loan refinancing are important steps forward which will help a large number of student borrowers manage their debt, and should be good news for anyone struggling with their monthly payments.