Obama's Executive Order Pushes to Lower Student Loan Debt
James Wright | 6/9/2014, 5:05 p.m.
President Obama signed an executive order Monday mandating that borrowers of student loans can pay at only 10 percent of their monthly income, part of his attempt to ease the increasing burden of student loan debt.
The order includes a forgiveness program for on-time payments and public sector employees. Teachers can have their balanced cancelled after 10 years and low-income borrowers can have their balance cancelled after 20-25 years of on-time payments.
"In a 21st century economy, a higher education is the single best investment that you can make in yourselves and your future, and we've got to make sure that investment pays off," Obama said Monday at the White House during an announcement of the signing.
Borrowers who don't qualify for forgiveness can use a repayment plan that would have a smaller balance to pay monthly but would extend the life of the loan, with interest accruing.
The Rev. Al Sharpton strongly supported Obama's action, saying that helping students pay off their educational loans is in the country's best interest.
"Ballooning student loan debt has contributed to lower wealth accumulation of Generation X and Y," Sharpton said in an issued statement. "Rates of student loan debt are higher among individuals with higher levels of education, living in lower-income households, younger people, African Americans and people with more financially dependent children. Federal student loan debt reached more than $1 trillion last year and the proportion of borrowers defaulting on their federal student loans has been on the rise for several years."