By George Zornick
President Obama announced a new strategy Monday to combat student loan debt: a dual plan to both lower the payments students must make while also giving them an opportunity to lower the principal on those loans.
Obama announced he would take executive action to expand a law enacted in 2010 that allowed recent graduates to pay no more than 10 percent of their monthly income to student loan repayments. That law was limited to people who got loans after October 2007 or who stopped borrowing by October 2011, and the executive action Obama promised Monday would extend it to approximately 5 million people who had older loans.
It will not go into effect until December 2015, however, while the Department of Education implements the new requirements.
Obama also announced he would act to renegotiate federal contracts with a wide variety of companies that service federal student loans in order to give students in danger of default more options to avoid it.
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