Last week, President Barack Obama signed an executive order that will let millions of college graduates cap their student loan payments at 10 percent of their income.
According to the Los Angeles Times, the order will help alleviate the burden for young Americans currently saddled with massive student loan payments.
“Everything I do is aimed toward reversing those trends that put a greater burden on the middle class and are diminishing the number of ladders to get into the middle class,” President Obama said during a formal announcement for the order.
“In America, higher education opens the doors of opportunity for all,” Obama said. “Some higher education and additional skills are going to be your surest path to the middle class.”
Officials said the new cap would be available for graduates by December 2015. The cap affects only federal loans, and does not influence private education loans. It should be noted that nationally, student loan debts have raised to about $1.1 trillion, more than three times the amount the debt was three years ago. Currently, student loan debt outpaces credit card debt.
Republicans were quick to criticize the order. “College graduates don’t need a $1 a day subsidy to help pay a $27,000 loan. They need a good job,” said Sen. Lamar Alexander (R-Tenn.) in a statement, according to the Times.
Are There Options If I Cannot Pay My Student Loans?
As we reported last week, student loans are becoming an increasingly troubling debt affecting millions of young Americans, preventing them from buying homes, saving for retirement and making investments in the economy.
While we appreciate efforts to reduce the burden that graduates will have to pay every month, the balance of their student loans will continue to be high and collect interest until further legislation is passed that reduces tuition rates. Additionally, lawmakers should make student loan debts easily dischargeable through bankruptcy.
Although discharging student loan debt can be difficult, you can still free up money for payments by filing for Chapter 7 or Chapter 13 bankruptcy. A bankruptcy triggers an ‘automatic stay’ that puts an end to credit card collection attempts and can end lawsuits brought on by lenders.
In addition, through a Chapter 7 bankruptcy, you can discharge other debts like medical bills and credit card debt, which can help free up money to make student loan payments.
If you are struggling with student loans and facing a growing financial crisis, contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.
Law Firm of Kevin D. Judd
Judd’s Judgment: Washington D.C. residents owe nearly twice as much student loan debt as other Americans.