WASHINGTON – Oregon’s Senator Jeff Merkley welcomed the announcement from the White House today that the administration will expand income-based repayment options for federal student loans, making higher education more affordable for as many as 5 million Americans.
The new plan will expand a 2010 law that allows students with federal student loans to cap their loan payments at 10 percent of their incomes, with any remaining balance forgiven after 20 years, or 10 years for those in public service jobs. This Pay As You Earn (PAYE) option has been available to most students in recent years, but not to those who borrowed before the new law went into effect. Today’s action will extend PAYE to Americans who borrowed before October 2007 or who have not borrowed since October 2011.
“We can’t afford for higher education to become a luxury that is out of reach of the middle class,” said Merkley. “As the first in my family to go to college, I know all too well how daunting the cost of college can be to students from working families. And with the cost of college going through the roof, it’s more important than ever to focus on making college affordable for the middle class. This is a great first step to lower the student loan burden for millions, and I’ll keep pushing on every front to make college more affordable.”
The administration also announced new actions today to ensure that more graduates are aware of income-based repayment options for which they may be eligible.
Merkley has been the leading proponent in D.C. for bold, new income-based strategies to take on student loan debt. He has introduced the “Pay It Forward” Guaranteed College Affordability Act, which would allow students the option to replace traditional Stafford Loans with a “Pay It Forward” Grant in exchange for a pledge to pay a fixed, low percentage of their income into a fund to finance college for the next generation of students.
Merkley has repeatedly pushed the administration to consider bolder income-based options for students being weighed down by student debt. In addition to the Pay It Forward proposal, Merkley recently wrote to the White House urging the Administration to consider changes like today’s actions that would expand income-based repayment to more borrowers immediately.
Much of the national conversation around income-based repayment was sparked by the Oregon proposal, put forward by Portland State University students, for a state Pay It Forward system that would allow students to attend state colleges and universities tuition-free in exchange for pledging a small portion of their future income.
“Oregon – and our innovative students – deserve a lot of credit for pushing income-based repayment to the forefront of the national conversation,” said Merkley. “If we want college to be affordable, borrowers have to be able to make their payments once they’re working without breaking the bank, and these kinds of programs guarantee that payments are affordable. It’s time we ended for once and for all students’ fear of being caught between high debt and low income.”