Washington, DC - June 9, 2014 - Today, U.S. Senator Charles E. Schumer applauded President Obama’s executive order that will allow federal student loan borrowers to cap their loan repayments at 10 percent of their monthly income, and have any remaining balance forgiven after 10 years of payments for those in public service or 20 years for those not in public service. President Obama is expanding eligibility under a current law that currently applies to loans after 2011 and now, with this executive order, the Department of Education will allow this for all Federal Direct Loans. In total, the White House predicts that this will help nearly 5 million borrowers.
“Student loans are a huge burden on the shoulders of 40 million young Americans that holds back their ability to achieve the American Dream. That’s why the Administration’s decision to cap federal loan repayments at 10 percent of a borrower’s monthly income, plus total loan forgiveness after 10 to 20 years, is welcome news that will spell relief for hundreds of thousands of New Yorkers,” said Schumer. “But we must do more. For young families to pay between 7 and 14 percent on tens of thousands of dollars-worth of student loans, when present day interest rates are so much lower, is an outrage. Our bill on the Senate floor this week, the Bank on Students Emergency Loan Refinancing Act, will reduce student loan interest rates to as low as 3.86 percent, giving young students and professionals further relief.”
Schumer noted that he is continuing to push a Senate plan that would give students a ‘Fair Shot’ at an affordable college education, by allowing borrowers that have both federal and private undergraduate loans at interest rates of up to 14 percent or higher to refinance at a rate as low as today’s rate for new borrowers, which is 3.86 percent. If passed, this legislation could help an estimated 25 million Americans, and 1.6 million New Yorkers, refinance outstanding student loans at lower interest rates, the same as those available to federal student loan borrowers taking out loans this year. This move would save a typical student $2,000 over the life of his or her loans. Schumer today said that under the refinancing plan, an individual who borrowed $30,000 would pay approximately $5,000 less over the life of the loan at the 3.86% interest rate, compared to 6.8% (this could vary based on the borrower’s specific circumstances).