WASHINGTON – President Obama is taking steps to help thousands of Americans better manage their federal student loan debt.
Details of Obama’s plan were announced by the White House on Wednesday and include streamlining the application process for those who want to enroll in income-based repayment plans, which set a cap on loan payments based on discretionary income.
About 700,000 people currently participate in income-based repayment plans, but Education Secretary Arne Duncan said the administration believes many more students would be likely to qualify. “This could be an important tool in helping those folks have an option and avoid going into default,’’ he said.
The White House announced its plans as Republicans and Democrats in Congress continue to struggle over how to avert a doubling of interest rates on new federal student loans for 7.4 million people on July 1. Both sides agree that the current 3.4 percent interest rates on subsidized Stafford loans should be extended for another year, but they disagree over how to pay it.
Top congressional Republicans made a new offer last week in a letter to Obama after the Senate rejected dueling Democratic and Republican plans in late May. House Speaker John Boehner, an Ohio Republican, and majority leader Eric Cantor, Republican of Virginia, sent another letter to Obama Wednesday stating they had not received any response from the administration.
In a call with reporters, Cecilia Munoz, director of the White House Domestic Policy Council, would not say whether any discussions have taken place.