Under a different program, the 2010 “Pay as You Earn” law, borrowers make repayments of no more than 10 percent of their monthly income. The benefit applies to those who started borrowing after October 2007, shortly before the recession began. Obama’s executive order would widen the eligibility to people who took out loans before then. The new rules, which would affect an additional 5 million borrowers, would begin in December 2015, according to the White House.
“While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement,” the White House press office said in a statement.
Senator Warren sat in the front row yesterday as Obama announced his student-debt plan at the White House.
Mary Kate Brunell said she has a good job working for a government contractor in Washington, yet said she’s constrained by the $108,000 she carries in student debt, mostly for a graduate degree in public administration from Columbia University in New York.
‘Financial Slavery’
Her largest single loan of $45,000 at an 8.5 percent interest rate is killing her ability to move forward, Brunell, 31, said.
“You can get a mortgage for half of that interest rate,” said Brunell, who wants to pay off her debt before starting a family. “It definitely impacts decisions, big and small.”
“While I don’t regret the decision to go to school, my student loans constitute long-term financial slavery,” Brunell said. “I don’t think any 18-year-old is fully prepared for the daily impact of actually paying them off.”