On Monday, June 9, 2014, President
Obama signed a new Presidential Memorandum directing the Secretary of Education
to propose regulations that would allow an additional nearly 5 million federal
direct student loan borrowers the opportunity to cap their student loan payments
at 10% of their income. The memorandum also outlines a series of new executive
actions aimed to support federal student loan borrowers, especially vulnerable
borrowers who may be at greater risk of defaulting on their loans.
Among the actions to be taken by the federal government,
as directed in the Presidential Memorandum, are:
- Borrowers of Federal
Direct Loans will have their Federal student loan payments capped
at 10% of their income beginning December 31, 2015.
- New rules will
help borrowers repay their loans on time and lower payments for servicers when
loans enter delinquency or default.
- Reduced interest rates will be
available for eligible veterans.
- The Secretaries of the Treasury and
Education will disseminate information about federal student loan repayment
options to millions of borrowers during the tax filing process.
Department of Education will target 2.5 million borrowers with the greatest risk
of encountering payment difficulty to get them back on track with their loan
- The Administration will work with various groups and
organizations to provide comprehensive information about repayment options and
federal student aid resources that are available to them.
- The Department
of Treasury will release a fact sheet clarifying how Pell Grant recipients may
claim the American Opportunity Tax Credit (AOTC).
Not all members
of Congress welcomed the announcement. In various statements, Speaker of the
House John Boehner (R-OH); Representative John Kline (R-MN), Chairman of the
House Education and the Workforce Committee; and Senator Lamar Alexander (R-TN),
Ranking Member of the Senate Health, Education, Labor, and Pensions (HELP)
Committee dismissed or challenged the validity of the proposed changes.
More information is available in the Presidential
Memorandum and the fact
sheet that the White House released on the proposals.
For more information, please contact Neil Snyder, ASHA's
director of federal advocacy, at firstname.lastname@example.org or
800-498-2071, ext. 5614.