WASHINGTON DC – Good news folks. If you’re one of the 40 million Americans struggling to pay back student loans, President Obama just made the load a little easier to swallow. The President signed an executive order allowing folks who took out certain federal student loans before October 2007 to cap their monthly payments at 10% of their income. It’s a move designed to ease the burden on folks struggling to get by.
“At a time when higher education has never been more important, it’s also never been more expensive,” the President said. “Over the last three decades, the average tuition at a public university has more than tripled.”
The announcement is an expansion on the President’s ‘Pay-as-you-Earn’ program from 2012 that allowed students taking new loans to cap their payments at 10%. The addition allows working adults with outstanding loans to capitalize on the benefit as well. The thing to keep in mind if you decide to take advantage of it is that reducing your monthly payments will ultimately lengthen the life of the loan and lead to more interest payments.
But with the economy still limping along and the cost of an education on the rise, any little bit helps.