Congressman Donald M. Payne, Jr. (NJ-10) released the following in support of President Barack Obama's new action to help millions of student loan borrowers better manage their debt.
"Making college more within reach for hard-working families has long been a priority of mine, and President Obama's new plan will help millions more people across the country pay for their higher education," said Rep. Payne, Jr. "College graduates across the great state of New Jersey are straining to pay off unprecedented levels of student loan debt. Recent data from the Department of Education show that New Jersey is tenth in the nation for the number of students carrying student loan debt with more than 1.12 million borrowers in New Jersey carrying an incredible total debt load of $27.2 billion. Skyrocketing tuitions and high interest rates have generated massive debt that is weighing down our economy and hamstringing a generation of youngsters."
Rep. Payne, Jr. continued, "The president's actions today are desperately needed to help struggling borrowers, and the rest of the country simply can't wait for congressional Republicans to act to lessen the burden of student loan debt. This is a good step in the right direction, but we must also focus on legislation that helps students refinance their loans at lower rates to make them more manageable."
The executive actions the president took today will allow millions more borrowers to better manage their student loan debt, directing the Department of Education to expand the Pay As You Earn (PAYE) program. PAYE enables student loan borrowers to cap their federal loan payments at 10 percent of their monthly income. The new rules will open the PAYE program to borrowers who are currently ineligible because they have loans that originated before October 2007. The administration estimates that these new rules will mean that an additional five million borrowers can cap their monthly student loan payments in relation to their income.
In addition, on Saturday, President Obama urged Congress to pass the Bank on Students Emergency Refinancing Act (H.R. 4582; S. 2292), which would help 25 million borrowers nationwide refinance their existing federal and private student loans to lower interest rates, similar to those that are currently available to new student loan borrowers. In total, American families would save around $55 billion under the legislation, which they can then reinvest in their local economy.
Specifically, a recent analysis of the Bank on Students Emergency Refinancing Act by the Congressional Research Service shows that a middle-class undergraduate student borrower with an average loan debt would save more than $4,000 over the life of his or her loan. A typical graduate student would save more than $2,500, and parents who borrowed to pay for their child's education would save more than $3,500.