The congressional deadlock over student debt has prompted President Barack Obama to take matters into his own hands through several new executive orders that aim to help alleviate the loans’ burdens on borrowers.

The most significant change, announced today, will let an additional 5 million college graduates cap their student loan repayments at 10 percent of their income, an option that the Obama administration anticipates will be available by December 2015. The “Pay as You Earn” payment plan is already available to graduates who started borrowing after October 2007; Obama’s order expands the option to anyone who’s borrowed in the past.

Obama’s orders supplement an effort in Congress to address the country’s $1 trillion student debt problem by allowing borrowers who took out loans at higher interest rates in the past to refinance their loans at lower, current rates. The legislation, which is being spearheaded by Sen. Elizabeth Warren and has the signatures of Sens. Mazie Hirono and Brian Schatz, is up for a floor vote this week.

student debt cartoon

Student debt cartoon

DonkeyHotey via Flickr

Obama has characterized growing student debt as a national crisis.

Student debt now exceeds credit card debt.  More than seven out of every 10 students who graduated from four-year colleges in 2012 had student loans, and the average borrower owed nearly $30,000 by graduation day, according to a report by the Project on Student Debt.

“At a time when higher education has never been more important, it’s also never been more expensive,” Obama said today in a speech announcing the executive order.

Average tuition at a public university has more than tripled over the last three decades, he said. Meanwhile, the average family’s income has grown by just 16 percent.

Obama issued two additional executive orders in an effort to ease student debt, including a proposal to renegotiate contracts with private banks that service federal student loans. The president also moved to step up outreach efforts and ensure every student borrower is aware of all the college financing options available.

The average debt of graduates from Hawaii Pacific University in 2012 was nearly $31,000, according to the Project on Student Debt, while that for the University of Hawaii at Manoa was about $21,400.

 

About the Author