In an effort to help combat the nationwide student debt crisis, President Obama on Monday signed an executive order to help ease the burden of student loan payments. Seventy-one percent of those earning a bachelor’s degree graduate with debt, which averages $29,400, according to a White House press release.
The presidential memorandum directs secretary of education Arne Duncan to expand the existing “Pay as You Earn” program to 5 million more Americans who are currently ineligible because they took out their loans too long ago. That program allows federal direct student loan borrowers the opportunity to cap their student loan repayments at 10 percent of their income.
Furthermore, “the department will renegotiate contracts with companies that service federal loans to give them additional financial incentives to help borrowers avoid delinquency or default,” reports The New York Times.
As Obama has made little progress on the issue by working with Congress, it’s heartening that he’s willing to take executive action to do what he can for the nation’s students. It’s especially important given the drastic income inequality between men and women. Although the sexes borrow at about equal rates, when they graduate they quickly experience a pay gap favoring men. That means women wind up using a larger chunk of their smaller paychecks on loan repayments, writes NOW President Terry O’Neill.
Meanwhile, today the Senate voted 56-38 to block a bill put forth by Sen. Elizabeth Warren, D-Mass, which would have allowed students to refinance their public and private student loans. The move could have saved “25 million borrowers up to $2,000 over the lifetime of their loans,” reports The Washington Post.
In his remarks at the signing of the executive order Monday, President Obama had thrown his support behind the bill, saying, “This is something that should be really straightforward, just like the minimum wage should be straightforward, just like equal pay for equal work should be straightforward.”