WASHINGTON (CBSMiami.com) – As jobs became scarce in South Florida, college became appealing. But students and recent graduates are struggling because of the crushing student debt incurred.
That’s where President Barack Obama hopes he can help. Wednesday, President Obama will announce changes to federal student loan repayments that will allow borrowers to cap payments at 10 percent of discretionary income beginning January 1.
The rule was due to take effect in 2014, but President Obama said the “pay as you earn” program needed to take effect now to help spur the economy.
Besides capping the payments, all remaining debt on federal loans would be forgiven after 20 years, five years earlier than under current law. The White House said the program could help up to 1.6 million borrowers save money on their loans.
The law would work like this: a nurse who is making $45,000 a year and has $60,000 in federal student loans would owe roughly $690 a month on a standard repayment plan.
If the nurse took advantage of the program, the payment would drop to $239.
The changes will also include a discount that will allow roughly 6 million borrowers to consolidate their loans.
In Florida, the White House estimated that more than 77,000 current students would be eligible to lower their plans.
The initiatives targeting students and recent college graduates could be key in reenergizing President Obama’s base from 2008 that has become apathetic to the political process because they feel that no one is representing them anymore.