Citing the “crush” of student loan debt and its impact on the future of the economy, President Barack Obama announced plans to expand a program designed to make it easier for borrowers to pay back their student loans.
Speaking Monday in front of a group of college students of various ages, President Obama said that he would be directing Secretary of Education Arne Duncan to expand the “Pay as You Earn” law, which caps student loan repayments at 10% of monthly income. The new changes are expected to increase the program’s pool of eligible participants by nearly 5 million people, President Obama said.
Currently the program applies to those who began borrowing after October 2007. The expansion would increase the eligibility to students who began borrowing before October 2007.
The expansion of the program is expected to be in place by December 31, 2015.
In his remarks, and in his weekly radio address, President Obama spoke of the “crushing” debt that students face and how it impedes economic growth. “At a time when college has never been more important, it’s also never been more expensive,” the President said. “If somebody plays by the rules, they shouldn’t be punished for it.”
In the Presidential Memorandum outlining the measures he was proposing, President Obama said that the average tuition costs at a public four-year college has “more than tripled” in the last 30 years, while a typical family’s income has only slightly increased.
“More students than ever are relying on loans to pay for college,” President Obama said. “Today, 71% 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.”
President Obama’s weekly address can be viewed below. And click to the next page to see exactly how student loan debt is stalling the housing recovery and what President Obama plans to do about it.