Only borrowers who do not have outstanding federal loan debt as of October 1, 2007 may qualify if they receive a disbursement on a loan on or after October 1, 2011. As with Income-Based Repayment (IBR), the borrower must prove Partial Financial Hardship.
Expanding Income-Based Repayment
The Administration’s “Pay as You Earn” plan expanded income-based repayment to enable students to take advantage of a new option to cap repayment of student loans at 10 percent of monthly income. These changes reduced the burden of student loans in a fiscally responsible way. Additionally, millions of borrowers are now eligible to consolidate Direct Loans and FFEL Loans and save up to half a percentage point on their interest rate.
Making Student Loans More Affordable
President Obama declared 2014 a year of action – vowing to use the power of his pen and phone to help ensure that hardworking Americans have the opportunity to succeed. And this week will be no different. With a focus on supporting hardworking Americans and upholding our country’s commitment to provide a quality education for all of our students, the President is again taking action. Today, he will deliver remarks at the White House, announcing new executive actions to further lift the burden of crushing student loan debt, including a Presidential Memorandum that will allow an additional 5 million borrowers with federal student loans to cap their monthly payments at just 10 percent of their income.
FACTSHEET: Making Student Loans More Affordable
A postsecondary education is the single most important investment that Americans can make in their futures. Higher education results in higher earnings and a lower risk of unemployment, but for too many low- and middle-income families this essential rung on the ladder to opportunity and advancement is slipping out of reach. Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family’s income has barely budged. More students than ever are relying on loans to pay for college. Today, 71 percent of those earning a bachelor’s degree graduate with debt, which averages $29,400. While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement.
The President and his Administration have a long track record of taking steps to make college more affordable and accessible for families. And as part of his year of action to expand opportunity for all Americans, the President is committed to building on these efforts by using his pen and his phone to make student debt more affordable and more manageable to repay.
Today the President will use the power of his pen to help millions of borrowers afford their student loan payments. He will sign a new Presidential Memorandum directing the Secretary of Education to propose regulations that would allow nearly 5 million additional federal direct student loan borrowers the opportunity to cap their student loan payments at 10 percent of their income. The Presidential Memorandum also outlines a series of new executive actions aimed to support federal student loan borrowers, especially for vulnerable borrowers who may be at greater risk of defaulting on their loans.
Today the President will also reiterate his call for the sean to pass legislation that could help an estimated 25 million Americans refinance outstanding student loans at lower interest rates, the same as those available to federal student loan borrowers taking out loans this year. This move could save a typical student $2,000 over the life of his or her loans.
- The Challenge of Student Debt
- Capping Student Loan Payments at 10 Percent of Income
- Doing All We Can to Help Students Repay their Loans
- Strengthen Incentives for Loan Contractors to Serve Students Well
- Ensure Active-Duty Military Get the Relief They Are Entitled to
- Work with the Private Sector to Promote Awareness of Repayment Option
- In addition, the Administration will work with Intuit to explore ways to communicate with federal student loan borrowers through Intuit’s free personal financial management product, Mint.com
- Use Innovative Communication Strategies to Help Vulnerable Borrowers
- Promote Stronger Collaborations to Improve Information for Students and Families
- Additional Actions to Reduce Indebtedness and Promote College Affordability: Helping Students and Families Access Education Tax Benefits
Weekly Address: Supporting America’s Students
Remarks of President Barack Obama
The White House
June 7, 2014
Hi, everybody. This is commencement season, a time for graduates and their families to celebrate one of the greatest achievements of a young person’s life. But for many graduates, it also means feeling trapped by a whole lot of student loan debt. And we’ve got to do more to lift that burden.
See, in a 21st century economy, the surest pathway into the middle class is some form of higher education. The unemployment rate for workers with a bachelor’s degree is just 3.3 percent – about half what it is for high school graduates. The typical graduate of a four-year college earns $15,000 more per year than someone with just a high school degree.
But at a time when college has never been more important, it’s also never been more expensive.
That’s why, since I took office, I’ve worked to make college more affordable. We reformed a student loan system that gave away billions of taxpayer dollars to big banks and invested that money where it makes a bigger bang – in helping more young people afford a higher education.
But over the past three decades, the average tuition at a public four-year college has more than tripled. The average undergraduate student who borrows for college now graduates owing almost $30,000. And I’ve heard from too many young people who are frustrated that they’ve done everything they were supposed to do – and now they’re paying the price.
I’ve taken action on my own to offer millions of students the opportunity to cap their monthly student loan payments to 10% of their income. But Congress needs to do its part. The good news is that Senate Democrats are working on a bill that would help more young people save money. Just like you can refinance your mortgage at a lower interest rate, this bill would let you refinance your student loans. And we’d pay for it by closing loopholes that allow some millionaires to pay a lower tax rate than the middle class.
That’s the choice that your representatives in Congress will make in the coming weeks – protect young people from crushing debt, or protect tax breaks for millionaires. And while Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans – including new action I will take this week.
This country has always made a commitment to put a good education within the reach of all who are willing to work for it. That’s what made us an economic superpower. That’s what makes us special. And as long as I hold this office, I’ll keep fighting to give more young people the chance to earn their own piece of the American Dream.
Thanks, and have a great weekend.
Contact your Congress person to tell them to pass the Bank on Students Emergency Loan Refinancing Act !!!