From the beginning of the Obama Administration, college affordability has been a top priority. The Administration has a strong track record in this arena, including doubling grant and scholarship aid with increases in Pell grant funding and the creation of the American Opportunity Tax Credit, keeping interest rates low on federal student loans, and seeding innovative, promising and evidence-based practices at colleges and universities that improve quality and keep costs down for students.
These efforts and investments have produced results. More Americans are graduating college than ever before. And we know that many students seeking a higher education have taken advantage of the federal student loan programs to help them pay for college, and now are successfully working to pay back that debt.
To ensure borrowers can manage and stay current on their monthly student loan payments, we created the Pay-As-You-Earn (PAYE) plan, now available to all direct student loan borrowers. With PAYE, borrowers can cap their monthly payments at no more than 10 percent of their income. Payments can be as low as $0; and those who are making responsible payments on their loans can often have their debts forgiven after 20 years of making payments (10 years for those Americans who have dedicated their lives to public service, such as teaching, nursing, non-profits, state, local or federal government employment). Helping more Americans manage their student debt is critical to ensure that borrowers are not struggling with burdensome student loan debt, especially as they seek to start a career, raise a family, buy a home, launch a business, or save for retirement.
Almost 5 million people are taking advantage of PAYE and related plans. But there are many more who may be struggling with their loan debt and could benefit from this offer by enrolling.
That’s why we’re launching the Student Debt Challenge, a call to action for colleges, universities, non-profits, businesses, state and local governments, and other employers to help more borrowers better understand their options, and take action to enroll in PAYE and related plans to help them manageably repay their debt and avoid delinquency and default.
We have already seen a number of schools, non-profits, and businesses step up to the plate. Each understands that by helping their alumni, members, and employees, they can better support their communities and attract and retain talented employees.
Now it’s time for you to take the challenge too and let us know how you’re doing it. Over the course of the next several months we will highlight businesses, communities, non-profits, and educational institutions that have stepped up.
Join us today and take the Student Debt Challenge. Submissions for the second round of commitments are due by Tuesday, May 31, 2016.
Ajita Menon is the Special Assistant to the President for Higher Education Policy