President Obama is taking executive action that aims to make it easier to pay down student loan debt.
Obama signed a memorandum on Monday that would allow more Americans to limit their student loan payments at 10% of their income. The action will expand on Obama’s “Pay as You Earn” program, which first launched in October 2011, making it available to those who took out student loans before October 2007.
Those who opt into the program will have their student loan payments set according to a sliding scale based on income. The remaining balance is forgiven after 20 years; those working in public service have any remaining balance forgiven after 10 years.
“[If] somebody plays by the rules, they shouldn’t be punished for it,” Obama said in a speech on Monday.
The original “Pay as You Earn” program was only available to those who took out loans after October 2007 and continued to borrow after October 2011. The White House estimates that the program’s expansion will offer student debt relief to an estimated 5 million Americans.
Obama, who signed the memo on Monday afternoon, will also take other executive action to help Americans pay for college. The administration plans to renegotiate its contracts with federal student loan servicers to encourage them to help borrowers stay current on their payments and avoid delinquency or default.
Some Republicans have already attacked the president’s actions for doing little to solve the underlying problem. “Nothing the president announced today will make the cost of higher education more affordable; nothing the president promised will help graduates find the jobs and opportunities they desperately need,” Rep. John Kline, chair of the House Education and the Workforce Committee, said in a statement.
The president also endorsed a Senate Democratic bill authored by Sen. Elizabeth Warren that would allow borrowers to refinance their student loans, including those issued by private banks. It would be paid for by the so-called “Buffett Rule” which would raise taxes on millionaires.
“Lower tax bills for millionaires or lower student loan bills for the middle class. This should be a no-brainer,” Obama said on Monday.
Senate Republicans have killed previously attempts to pass the “Buffett Rule” and have also attacked Warren’s proposal on other grounds. ”This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy,” Senate Majority Leader Mitch McConnell said in a statement.