Obama Takes Executive Action on Student Loan Debt

By Christine Alexis

Recent college grads, like me, got a gift from President Obama. He signed an executive order to make it easier for college graduates to pay off their student loan debts. It’s a great timing for those of us who just graduated and millions who came before us. We feel trapped by student loan debt.

President Obama’s plan gives about 5 million people an opportunity to tie their monthly payments to what they earn.  This means your loan payment could be capped at 10 percent of your monthly income starting December 2015.  The order covers those who borrowed money between October 2007-October 2011.

The burden of the nearly $1.2 trillion student loan debt ripples through the economy and is preventing many from buying cars and homes according to the Federal Reserve Bank of New York.  69 percent of  twenty-five-year-olds who took student loans are now in debt for, on average, about $20,926.

President Obama’s order supports the efforts of Senator Elizabeth Warren (D-MA) who proposed a bill  earlier this year to allow students to refinance their loan payments the same way a person would refinance mortgage payments.

Republicans in the House of Representatives oppose the idea and say it’s too expensive. They accuse borrowers of “looking for a handout.”  In his speech today President Obama responded by saying, “They think young people aren’t trying hard enough… no one’s asking for a handout. They’re just doing what they’re supposed to. They just need help to move on with their future.”

President Obama’s order doesn’t require congressional action and those of us who have debts are still worried, but this at least gives us a chance to try to manage our payments in a reasonable way.