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Obama expected to promise student loan relief

President Obama will announce on Monday an expansion of a program that helps student loan borrowers manage their debt, a White House official said.

The official said Obama will expand the criteria for an alternative repayment program, which caps monthly payments for certain federal student loans at 10% of a borrower’s discretionary income.

The changes would allow an additional 5 million borrowers to qualify, the official said.

It was not clear when the program would begin, but the New York Times, which first reported the news, said it would be available in December 2015.

The alternative payment programs are designed to help borrowers struggling under the weight of student loans. They include forgiveness programs for on-time payments and public-sector employees. Teachers can have their balance canceled after ten years, for example. Low-income borrowers can have their balance canceled after 20 or 25 years of on-time payments.

Borrowers who don’t quality for forgiveness but use a repayment program find their monthly payments reduced but spread out over a longer period of time. That means they will pay more over the lifetime of the loan, as there is additional time for interest to accrue.

Income-based repayment and Pay As You Earn aren’t available for borrowers who turn to private institutions rather than the government.

The official said Obama will also voice support for a Democratic proposal on Capitol Hill that would allow borrowers to refinance their student loans. The proposal by Sen. Elizabeth Warren would extend current rates for new borrowers to those with outstanding loans at higher rates.

“While Congress decides what it’s going to do, I will keep doing whatever I can without Congress to help responsible young people pay off their loans — including new action I will take this week,” Obama said in his weekly address on Saturday.

Student loans have been in the spotlight as the amount of debt skyrocketed, taking second place to only home mortgage debt, according to the Consumer Financial Protection Bureau.

On Tuesday, Obama is scheduled to discuss student loan debt and other education topics in a chat on the website Tumblr.

9 comments

  • Ron Melancon

    Who is going to pay? I want somebody else to pay for my house, my car and everything else. I was not their when they signed for the student loan so why should they skip out ? Why are they getting a bailout so these stupid students will vote for a political leader who just have them a free pass. Why should my children pay when we can’t afford to pay for their college

  • Ron Melancon

    Mr. President before you promise this why don’t you first fix the Vets and theme VA hospital mess then fix social security then fix Medicare and Medicade then come to Richmond and help them fix leaking school roofs and our school buses and then maybe address student loans

    • Clayton Bigsby

      Because he’ll get more political grease for the dems in the next election by making rebublicans pay for this. Remember only 47% pay taxes, so that 53% that don’t need handouts at every turn or they’ll forget. They’re not very bright and there memory only reflects back to the last handout.

  • Shelly

    Two idiots making idiotic comments that nobody cares about and President Obama will never see.

    • reeltime

      Well Shelly, you can pay for all these vote buying freebies he continues to hand out. The majority of taxpayers are tired of it.

    • Mo Fiscal conservatism

      Shelly, obviously you care about it….
      A bailout for people who made bad decisions is a horrible plan, in my opinion. They weren’t forced to take out the loans they did, like Obamacare. They chose the school they went to, chose the tuition they wanted to pay, chose the public loans they tool out to pay for it. Now that they can’t afford the payments, they want us to bail them out? The banks didn’t surprise them with new (secret) interest rates. It was all on the contract.
      My advice, read before you sign. Just because you got accepted, doesn’t mean you can afford it. See these are ametuer mistakes. Not my problem!!
      And crushing the U.S. economy because you make bad decisions is selfish. And again, not my problem.

  • R Moffett

    Shameless pandering to those who feel entitled to have anyone but themselves pay for their every want and need. In today’s government, personal responsibility, individual accountability, and the Constitution mean nothing

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