Obama Announces Executive Action on Student Loans

President Barack Obama on Monday announced a series of executive steps he was taking to tackle the $1.2 trillion student debt crisis, including the expansion of a federal program that puts a cap on monthly loan payments.

The first of the three steps outlined was the expansion to those with older loans of the Pay As You Earn program, which allows those holding federal student loans to cap their monthly payments at 10 percent of their income. After 20 years of payments, the program forgives any remaining debt.

Welcoming the move, Independent Vermont Sen. Bernie Sanders stated, “Millions of American families are struggling to repay student loans. Capping payments at no more than 10 percent of income is one way to help.”

Mark Huelsman, Senior Policy Analyst with the public policy organization Demos, writes that the executive action recognizes “that student debt is something that hits households well beyond college age. Around a third of student debt is held by those over 40, and delinquency rates generally rise by age.”