In 2010, Congress pass and President Obama signed the Health Care and Education Reconciliation Act. Along with cutting off the private student loan market by removing subsidies, making loans pretty much the exclusive realm of the federal government, the legislation capped the repayments of new loans to 10 percent of the persons discretionary income. The previous cap was 15 percent.
Well, that’s not good enough for King Obama, so he’s going to pull out his phone and pen.
The president will issue an executive order Monday in the name of easing student borrowers’ debt loads by capping repayments at 10 percent of their monthly income, the White House confirmed to POLITICO.
President Barack Obama said in his weekly address Saturday that he would take action on student loan issues in the coming days, but gave no details. The executive order, first reported by the New York Times, will expand on a 2010 law that capped borrowers’ repayment but left a hole in eligibility for people with older loans. Those left out of that relief include people who borrowed before October 2007 or stopped borrowing by October 2011.
Note how ABC News refers to Obama’s “plan” and the “rollout.” He is totally bypassing Congress again, not using the words “law” or “legislation.”
According to the new plan, the changes would allow an additional five million borrowers to qualify and would be available starting in December of next year.
Within the new rollout, forgiveness programs for on-time payments and public sector employees. Also, teachers can have their debt balances completely canceled after twn [sic] years of payments. Low income borroweres [sic] can have their balances canceled after 20 to 25 years of on-time payments.
Side Note: I’m not “for” the subsides provided to banks and institutions who were providing and managing student loans. It was the federal government who set up the rules so there would be subsides to banks so they could provide lower student loan rates. The federal government thought they could manage all of those loans themselves and save money. Let’s be clear, the federal government is not efficient at all, and it will cost more.
So why take control? They took control so they have the ability to change the rules in the future – including giving the president “cover” to arbitrarily change the law – without any blow-back from the private sector. Trust me, this puts a liberal administration in a position to wipe out portions of student loan debt and we won’t be able to do a damn thing about it. No worry for college administrators and professors, they will get paid.
Why is the Obama administration so focused on “burdensome” student loan debt when there is a clear issue with the rising cost of college tuition? Why has the administration not complained about rising tuition? Hummm…