UPDATE (June 9, 2014): http://www.holdfasttodreams.org/obamas-monday-june-9-2014-announcement/
When’s the announcement?
Monday, June 9, 2014 at a 1:45 p.m. event.
Remarks of President Barack Obama from The White House Weekly Address (June 7, 2014)
“I’ve taken action on my own to offer millions of students the opportunity to cap their monthly student loan payments to 10% of their income. But Congress needs to do its part. The good news is that Senate Democrats are working on a bill that would help more young people save money. Just like you can refinance your mortgage at a lower interest rate, this bill would let you refinance your student loans. And we’d pay for it by closing loopholes that allow some millionaires to pay a lower tax rate than the middle class,” said Barack Obama in the Weekly Address. (http://www.whitehouse.gov/photos-and-video/video/2014/06/07/supporting-americas-students#transcript)
Supporting America’s Students (White House Weekly Address)
What does this mean?
According to the White House, Obama will announce he’s expanding “Pay As You Earn” (“PAYE” program where borrowers pay no more than 10 percent of their monthly income in loan payments). Currently, the program is only available to borrowers who started borrowing after October 2007 and kept borrowing after October 2011.
Obama plans to start allowing those who borrowed earlier to participate. According to a White House official, the changes would allow an additional 5 million borrowers to qualify. The new PAYE will be available beginning in December 2015.
Obama also plans to announce government renegotiation of contracts with federal student loan servicers to make it easier for borrowers to avoid defaulting on their loans. He will ask the Treasury and Education Departments to work with tax preparers (H&R Block and TurboTax), to increase awareness about tuition tax credits and flexible repayment options available to borrowers.
Further, Obama’s executive action eliminates that waiting period under the income-based repayment plan so borrowers can take advantage of lower payments earlier. Currently, the maximum monthly payment is set to drop from 15 percent of income to 10 percent in July 2014.
What’s in the Bill?
A bill proposed by Sen. Elizabeth Warren (D-Mass.) would allow borrowers to potentially save money by giving them a chance to effectively pay off their high-rate existing loans in exchange for new loans with lower interest rates.
The bill would allow borrowers to refinance loans owned by the private sector into new loans made by the Education Department.
In his weekly address, Obama noted that the Senate proposal from Sen. Elizabeth Warren would be paid for by closing tax loopholes for millionaires. Warren’s bill is a central part of Senate Democrats’ so-called “Fair Shot” agenda where thirty-five other senators are co-sponsoring the measure.
Will the proposal pass?
Analysts at Compass Point Research & Trading, a financial firm, put the odds of it becoming law at less than 10%. Without Republican support, the proposal would be unlikely to receive the 60 votes needed to prevent a filibuster in the Senate or pass the GOP-controlled House of Representatives.
On Tuesday, June 10, 2014 at 4:00pm ET President Obama will take to Tumblr to answer your questions about education, college affordability, and reducing student loan debt.
Starting June 5, 2014 you can submit questions for the President at ObamaIRL.tumblr.com.