This week President Obama signed an executive order that will have an immediate impact on student loans. The president said in a press conference that his order will focus on three main areas:
1) The president will direct the Secretary of Education, Arne Duncan, to cap student loan payments at 10% of the borrower’s income, for borrower’s who are actively paying their loans. The president referred to this as “pay as you earn.”
2) The president called for a renegotiation with lenders like Sallie Mae that service student loans.
3) The president wants every borrower to be informed about all of the loan options and loan repayment options that are available to them.
A main point of interest in the order is the call for the forgiving of student loans after 20 years of repayment history, as part of the pay as you earn concept. Many of those who are opposed to the president’s executive order may realize that this option has already been available to students since 2007. Millions of students who started college in 2008 or after are already privy to these payment options.
But the president’s order opens these payment options and percentage caps to approximately 5 million Americans who had accumulated student loans prior to 2008. It also sets the precedent for future borrowers.
The order also extends this relief to all federal student loan borrowers, not just those with loans serviced by Sallie Mae. Service members who accumulated federal student loans before they entered the military are no longer required to ask their student loan servicers for interest rate reductions; with the signing of the executive order, the lower rate will already apply.
It should be mentioned that this executive order in no way affects the Post-9/11 GI Bill. The GI Bill is not a loan, it pays tuition directly to schools on the Veteran’s behalf.
Military Connection proudly serves those who serve in the Army, Navy, Air Force, Marines, Coast Guard, Guard & Reserve, Veterans and their Families. We are the go to site for Veteran Employment and information on Veteran education. Militaryconnection.com provides Veterans with and Directory of Employers, a Job Board, information on the Post-9/11 GI Bill, and a blog that offers Veterans boundless information. Be sure to visit Militaryconnection.com, the go to site.
Military Connection: Obama Caps Student Loans: By Debbie Gregory
Dive into World War II's finest literature, perfect for history buffs and those seeking captivating…
Explore 7 Pivotal Moments in US Military History: From the Birth of the Continental Army…
Explore a diverse group of military influencers and veterans as they share their unique experiences,…
Understanding Agent Orange Effects, VA Benefits, and Veteran Support: A Comprehensive Guide for Vietnam War…
Explore the top ten must-read books about World War One, including memoirs, historical non-fiction, and…
Discover the enduring legacy of Vietnam Veterans and the profound impact of the Vietnam War…