This week President Obama took big steps in closing crucial loophole aimed at easing the burden of student loan debt payments. Hoping to reach more borrowers that are suffering under massive monthly payments, the extension is targeted towards another 5 million people.
On Monday, Obama issued a presidential memorandum to the Education Department extending monthly payment caps. Previously only loans initiated between October 2007 and October 2011 were eligible for the income based program. This order could grant students with loans initiated before October 2007 the eligibility to cap their monthly payments at 10 percent of their income. For many, this means hundreds in monthly savings. This order may also allow for borrower’s loan balances to be forgiven after 20 years. Sen. Elizabeth Warren also proposed a bill for the loosening of requirements in approving refinancing applications, which could help those not eligible for a payment cap to reduce their monthly balance through a new loan with lower interest rates.
While this issuance certainly comes as good news for borrowers, not everyone was pleased by the announcement. In a statement, House Speaker John Boehner said, ”Today’s much-hyped loophole closure does nothing to reduce the cost of pursuing a higher education, or improve access to federal student loans – nor will it help millions of recent graduates struggling to find jobs in the Obama economy.” Critics aside, the vote for the bill is offering a glimmer of hope for millions struggling with high loan repayments.
Read more: http://abcnews.go.com/blogs/politics/2014/06/obama-extends-student-loan-debt-relief-to-more-borrowers/