June 8 (Bloomberg) -- U.S. President Barack Obama will move tomorrow to ease monthly payments for people with student loans, according to a White House official.
Obama, in executive action coordinated with a legislative push by Senate Democrats, will direct the Department of Education to expand the number of people who can take advantage of a law capping payments on federal direct loans to no more than 10 percent of their monthly incomes.
“I’ve heard from too many young people who are frustrated that they’ve done everything they were supposed to do -- and now they’re paying the price,” Obama said yesterday in his weekly address.
The action marks the latest effort by Obama’s administration to advance policies by executive action after being stymied on Capitol Hill. With the help of several cabinet heads, the president has spent much of this year initiating modest changes in programs that may provide a boost to Democrats in advance of the midterm elections.
Obama’s action tomorrow will expand a 2010 law that tied payments to income, according to the White House official, who said an additional 5 million people who took out loans before October 2007 or haven’t borrowed since 2011 will be eligible.
The proposal aligns with a bill from Senate Democrats that would allow individuals to refinance their student loan debt at current rates. Democrats have argued that the $1.2 trillion worth of outstanding student-loan debt retards economic growth as young college graduates are forced to postpone home buying or other purchases.
Senator Elizabeth Warren, a Massachusetts Democrat and sponsor of the bill, called student-loan debt levels “truly an emergency circumstance.”
Republicans have opposed the proposal, which would be paid for through tax increases on wealthy individuals, and are likely to block its passage.
“This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow, or do anything about the lack of jobs grads face in the Obama economy,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in a statement.
In a preview of the political message Democrats will advance this week, Obama said in his weekly address that lawmakers will have to choose whether to “protect you from crushing debt, or protect tax breaks for millionaires.”
Obama will also take part in a live question-and-answer session on student debt on June 10 on blogging site Tumblr Inc., the official said.
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