New proposal will expand 10% monthly caps to as many as six million borrowers, regardless of when they originally borrowed.
Continuing its work to make student loan debt more manageable, the U.S. Department of Education today announced its plans to provide an additional six million federal loan borrowers access to student loan payments capped at 10 percent of income.
Last year, as part of his year of action to expand opportunity for all Americans, President Obama issued a Presidential Memorandum directing the Department to propose regulations to ease the burden of student loan debt by expanding repayment options available to borrowers and building awareness of income-driven repayment plans.
“A college education is one of the most important investments that Americans can make in their futures. Unfortunately, for too many hardworking families, it feels like a higher education is simply slipping out of reach,” said U.S. Secretary of Education Arne Duncan. “This proposal is an investment in our economy’s future that provides targeted benefits to even more borrowers, so they can stay current on their loans and furthers our commitment to lifting the burden of crushing student loan debt.”
In addition to expanding the 10 percent payment cap to millions of Americans, this proposal, which will be published in the Federal Register later this week, also contains other improvements, including:
- Creating a streamlined process to identify military service members who hold Federal Family Education Loan (FFEL) Program loans and who are eligible for lower interest rates while they are on active duty, a process that the Department already uses for servicemembers with Direct Loans.
- Requiring guaranty agencies to contact FFEL Program borrowers who rehabilitated their defaulted loans to provide them information on repayment plans, including income-driven repayment options, to help them decide which repayment plan to choose.[…] Continue reading…