Obama to use executive order to help more people in debt because of student loans
WASHINGTON — President Obama will move on Monday to ease monthly payments for people struggling with student loans, according to a White House official.
Obama, in executive action coordinated with a legislative push by Senate Democrats, will direct the Department of Education to expand the number of people who can take advantage of a law capping payments on federal direct loans to no more than 10 percent of their monthly incomes.
“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,” Obama said.
The action marks the latest effort by the Obama administration to advance policies by executive action because of being stymied on Capitol Hill. With the help of Cabinet heads, the president has spent much of this year initiating modest changes in programs that may provide a boost to Democrats in advance of the midterm elections.
Obama's action will expand a 2010 law that tied payments to income, according to the White House official, who said 5 million people who took out loans before October 2007 or have not borrowed since 2011 will be eligible.
The proposal aligns with a bill from Senate Democrats that would allow individuals to refinance their student loan debt at current rates. Democrats have argued that the $1.2 trillion worth of outstanding student loan debt retards economic growth as college graduates are forced to postpone buying homes.
The bill's sponsor, Sen. Elizabeth Warren, D-Mass., called student loan debt levels “truly an emergency circumstance.”