MARLBOROUGH, Mass. (6/11/14)--Credit unions and the Massachusetts, New Hampshire and Rhode Island Credit Union Leagues received prominent media coverage Monday when league president Paul Gentile was quoted in a Fox Business News article on President Barack Obama's executive order to expand the 2010 "Pay as You Earn" student loan program.
The executive order allows borrowers to limit repayment of federal student loans to 10% of their monthly incomes. It will take effect in December 2015 and will affect roughly 5 million borrowers.
The order also increases eligibility in the program to include those who took out loans before 2007 or stopped borrowing by October 2011 (Daily CU Scan June 10). It is expected that the new guidelines will make it possible for an additional 5 million people to participate in this program.
Obama also announced he is directing the government to renegotiate contracts with federal student loan servicers to encourage them to make it easier for borrowers to avoid defaulting on their loans. He asked the U.S. Treasury and Education departments to work with major tax preparers to increase awareness about tuition tax credits and flexible repayment options available to borrowers.
In the article, Gentile suggested the government should allow private lenders to consolidate federal student loans.
Also, more information should be provided to students ahead of college enrollment, Gentile suggested. "We need to train our young adults to make sound decisions in their choice of college and loan amounts," Gentile said. "Right now, they don't have the necessary data to make these decisions with all the information they need."
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