Dive Brief:
- President Barack Obama is scheduled to announce new steps Monday for easing college loan debt burdens, the New York Times reported.
- One move will include an expansion of the number of borrowers eligible to have their loan repayments capped at 10% of their monthly income, an option created by a 2010 law. The president’s plan would expand eligibility to include borrowers who got their loans before October 2007 or stopped borrowing by October 2011 — an estimated 5 million people.
- Another move includes having the U.S Department of Education offer incentives to companies that service federal loans to help borrowers avoid delinquency or default.
Dive Insight:
The expansion of the 10% caps for borrowers won’t be available until December 2015 because of the time needed by the Department of Education to propose and implement the new regulations. A third initiative to help student loan borrowers is to have the Education Department and the U.S. Treasury Department work with H&R Block and Intuit, the two largest tax preparation firms, to make sure borrowers are aware of repayment options and tax credits for tuition. It is also expected that Obama will urge Congress to pass a bill sponsored by U.S. Sen. Elizabeth Warren (D-MA) to allow 25 million student loan borrowers to refinance their federal and private loans at lower interest rates and also raise $72 billion from a new tax on the upper class to pay for the initiative. The U.S. House of Representatives, controlled by Republicans, would likely ignore the proposal, even if it passed the Senate.