President Obama has announced his plans to enact several pieces of legislation to help ease the burden of student loan debt, The New York Times reports. First, he intends to extend a 2010 law that caps borrowers’ repayments at 10% of their monthly income. Starting December 2015, the law will apply to five million borrowers who were previously ineligible because they took out loans before October 2007 or stopped borrowing before October 2011.
The White House has also announced its support for a Senate bill that could help 25 million Americans refinance their federal and private student loans at a lower rate. (At this point, it’s unclear whether the bill will garner enough Republican votes to pass.)
To keep borrowers from defaulting on their loans, Mr. Obama is working with companies that provide federal loans to give additional financial incentives for borrowers to make their payments on time. In collaboration with tax-preparation firms H&R Block and Intuit, Inc., the government will help ensure that borrowers stay in the loop when it comes to repayment options and tax credits for college tuition.
According to the Congressional Budget Office, Americans currently owe a total of about $1 trillion in federal student loans or loan guarantees—in addition to more than $100 billion in private student loans.
Curious about your current options for repaying federal loans before the proposed changes take effect? Learn more about the different plans here.