President Obama has signed an executive order that caps a student loan borrower’s monthly fees at 10 percent of their income. The order will help five million borrowers who took out loans before October 2007 or stopped borrowing by October 2011.
The order has been sent to Secretary of Education Arne Duncan with the goal of making it available in December 2015. There’s also an effort to renegotiate with loan providers to offer perks to borrowers who pay on time, create a six percent ceiling for active-duty military members and partner with H&R Block and Intuit (the tax preparation companies) to provide customers with info about tax breaks and education repayment options.
“The average debt per borrower from the class of 2012 ranged from $17,994 in New Mexico to as much as $33,649 in Delaware,” reports The Washington Post.
The Christian Science Monitor notes that, while the administration is doing a good job of acknowledging the issue of student debt, this action doesn’t address the underlying issues that lead to the sort of crippling debt that many students are dealing with. President Obama acknowledged as much with his support of Sen. Elizabeth Warren’s proposal that will allow students to refinance high-interest debt. (It could come up for a vote tomorrow.) He noted in his remarks at the signing of the memo that Congress, as a whole, must take action as well.
Many say that the high level of student debt ($1.2 trillion) is keeping young adults from owning homes and cars, which is also having an impact on the economy as a whole.