President Barack Obama is set to issue an executive action to ensure student loan borrowers get repayment relief.
An official in the White House confirmed to Reuters Sunday that Obama was planning to sign the order Monday. The action will direct Education Secretary Arne Duncan to allow student loan borrowers to cap their monthly payments at 10 percent of their income.
While a federal law was already in place to allow this, Obama's action is aimed to allow student who borrowed before Oct. 2007 and after Oct. 2011 to do so. The unnamed official said the action is expected to assist five million borrowers, though it will not go into effect until 2015.
Obama reportedly issued the executive action because a House of Representatives made up mostly of Republicans would likely have shot his idea down. Democrats and Republicans have long been divided on where to keep federal student loan rates, but they passed a bipartisan bill last year tying them to the financial market.
"Many student loan borrowers are working and trying to responsibly make their monthly payments, but are nonetheless struggling with burdensome debt," the White House official told Reuters.
"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation, with such consequences as a damaged credit rating, losing their tax refund, or garnished wages."
Late last week, the President announced he would be endorsing a bill authored by Sen. Elizabeth Warren (D-Mass.), MassLive.com reported. The bill would allow borrowers to essentially trade their existing high-interest loans for newer, low-interest ones. Sources have said Obama has been struggling with how to finance the bill while also considering the plight of borrower advocates.
Student loan debt has reached $1.2 trillion across the nation, surpassing credit cards, homes and all else to be the leading cause of debt in America. Obama focused on the issue in his weekly address.
"In a 21st century economy, the surest pathway into the middle class is some form of higher education. The unemployment rate for workers with a bachelor's degree is just 3.3 percent - about half what it is for high school graduates," the President said. "The typical graduate of a four-year college earns $15,000 more per year than someone with just a high school degree. But at a time when college has never been more important, it's also never been more expensive."
