[caption id=”attachment_88559″ align=”aligncenter” width=”4333″]President Barack Obama signs a Presidential Memorandum on reducing the burden of student loan debt, Monday, June 9, 2014, in the East Room of the White House in Washington. (AP Photo/Pablo Martinez Monsivais)
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Despite the nearly $22 billion shortfall it created last year, the Obama administration continued its push for a more generous and lenient income-based federal student loan repayment program this week.
A federal panel began work Tuesday on a new set of regulations to expand the availability of this repayment program, known as Pay As You Earn, to an additional 5 million student loan borrowers, Inside Higher Ed reported.
The panel, which is made up of consumer and student advocates, college financial aid administrators and lending officials, plans to come up with a finalized plan over within the next three months.
About 40 million Americans have taken out student loans and are currently burdened with more than $1.2 trillion in outstanding debt.
Obama’s executive order that launched this program allowed some borrowers to reduce their payments to 10 percent of their income and would even forgive some borrowers’ loans after 20 years. Now he wants the panel to take that even further.
“We’re still seeing too big a debt load on too many young people,” Obama said back in June, adding that “the outrage here is that they’re just doing what they’ve been told they’re supposed to do. I can’t tell you how many letters I get from people who say, ‘I did everything I was supposed to and now I’m finding myself in a situation where I’ve got debts I can’t pay off.’ ”
But these repayment program will come at a high cost to taxpayers. Barclays Capital has warned in several reports that Obama’s student loan allowances could cost taxpayers as much as $250 billion over the next decade. With $21.8 billion in its first half of a year, Obama’s program is right on track to reach that number.
