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On Monday, President Barack Obama signed an executive order that lessens the college loan burden on five million young Americans. The order caps repayments at 10 percent of the monthly income for borrowers, according to The New York Times.
“These rising costs have left middle-class families feeling trapped,” Obama said. “You’ve got middle-class families who can’t build up enough savings, don’t qualify for support, feel like nobody’s looking out for them.”
Obama spoke about his own financial history when signing the order. He said that he and Michelle finished paying off their law school loans 10 years ago.
“This is why I feel so strongly about this,” Obama said. “This is why I’m passionate about it.”
The order signed by Obama comes alongside a bill from Senate Democrats that permits 25 million borrowers to refinance their student loans at lower interest rates. The measure would be financed by taxing the wealthy.
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“Everybody here knows it’s a partisan political stunt,” Senator Lamar Alexander of Tennessee. Alexande is the ranking Republican on the education committee. Alexander said that the bill will expand federal debt and raise taxes. He also said that it will offer loan-holders a $1 per day subsidy.
The order signed by Obama will take effect in December of 2015 to give the Education Department enough time to draft and institute new rules.
Arne Duncan, the education secretary, said, “We’ll figure that out the back end, but we think this is something that’d be fantastic for the economy. This is not about pointing fingers and laying blame. This is about mutual responsibility.”
Obama continued with, “It would be scandalous if we allowed these kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started with their lives.”
Obama was joined at his announcement by recent graduates who were indebted to their schools or banks for their education.
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