From investing in Pell Grants to supporting the American Opportunity Tax Credit, President Obama and his administration have worked to make college more affordable for more students and their families. Now, the President is taking the next step by making it easier for students to repay federal student loans. Here are just a few of the ways the President’s executive order today will help millions of current and future students:
- In 2010, President Obama proposed an income-based repayment plan will allow those with student loans to cap their monthly payments at 15% of their income. Starting July 1, 2014, that limit will be reduced to 10% of discretionary income.
- The President recently announced a new “Pay as You Earn” proposal that will make these benefits available to some borrowers as early as 2012—reducing monthly payments for more than 1.6 million students.
- Beginning in January 2012, the Department of Education will reach out to borrowers with both guaranteed and direct loans to allow those borrowers to consolidate their loans into one monthly payment—resulting in a discount and reducing their risk of default.
- The Consumer Financial Protection Bureau and the Department of Education are working together to launch a new “Know Before You Owe” project to help students better understand and compare financial aid packages from different colleges and universities. This initiative will help make sure students and their families have all the resources they need to make an informed financial decision before choosing a college.
For more information on these programs, visit the White House blog.