President Obama signed an executive order Monday to ease the student loan debt crunch. This new law extends 2010’s “Pay As You Earn” program which capped some graduates’ repayments at 10% of their monthly discretionary income. Now, the White House will be expanding eligibility of the program to those who took out loans before October 2007 or stopped borrowing by October 2011. Their payments are current capped at 15% of income, so this will ease the burden for many.
The reprieve will go into effect December 2015. It is expected to expand payment relief to nearly five million people. The president’s plan will also allow low income borrowers to have their balance cancelled after 20 years of on time payments in public service jobs, instead of the previous 25 years for student loan forgiveness.
Although this is a step in the right direction, many people have criticized the plan, saying few will actually benefit from it. The repayment programs are designed only for the poorest borrowers, so no more than 10% of student loan borrowers qualify for the programs. Plus, the programs do not help borrowers with private loans or those who have defaulted on student loans.
Souce: CNN
