Congresswoman Waters Applauds President Obama on His Steps towards Helping Americans Manage Current and Future Student Loan Debt
Today, the Obama Administration announced it is taking steps in making it easier for Americans to manage student loan debt and apply for federal financial aid. The announcement is apart of a series of executive actions the President is taking to assist in putting Americans back to work and strengthen the economy. The Congresswoman's comments on this proposal are below:
I applaud President Obama's new proposals aimed at increasing college access and affordability by making it easier for millions of Americans to manage current and future student loan debt. The Administration's new "Pay As You Earn" proposal will educate federal loan borrowers about the Income-Based Repayment which under current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. Although, few students know about this option, the President's new proposal will create a lower monthly payment cap of 10 percent of their discretionary income, instead of 15 percent, and change the loan forgiveness statute to after 20 years rather than 25 years of responsible payments. This is a significant step in the right direction in providing some economic relief for nearly 1.6 million of Americans currently saddled with student loan debt. The loan consolidation initiative within this proposal will make it easier for borrowers with multiple loans to pay their monthly student loan payments and avoid default. Student borrowers with both a loan from the Department of Education and a loan through the discontinued Federal Family Education Loan program will benefit immensely from this initiative and will have access to lower interest rate incentives as a result of it. Lastly, the President's "Know Before You Owe" project, an collaborative effort between the Consumer Financial Protection Bureau and the Department of Education, assists students and families decide where to go to college and how to pay for it. The new model financial aid disclosure form, or draft "shopping sheet," will make it easier for millions of families in minority communities to compare the real cost of different college options. I am encouraged by President Obama's action towards offering immediate relief to current college students and recent graduates during this tough economic time by giving them the opportunity to limit loan payments. I encourage my colleagues within the chambers of Congress to follow his lead in finding real-life solutions to real-life problems American families face daily.