WASHINGTON, June 9 (Xinhua) -- U.S. President Barack Obama on Monday signed a presidential memorandum on reducing student loan debt in a bid to ensure no young person be priced out of education in the country.
The memorandum is aimed to expand the President's "Pay As You Earn" program that caps borrowers' monthly loan payment at 10 percent of their income to more federal direct loan borrowers.
As that program is only available for those who started borrowing after October 2007, Obama's memo expands that program by making opening it to those who borrowed anytime in the past.
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. And he asked treasury and education departments to work with major tax preparers to increase awareness about tuition tax credits and flexible repayment options available to borrowers.
Obama said the rising costs of college have left America's middle class feeling trapped. This made him put his pen to the presidential memorandum that he said could help an additional 5 million borrowers lower their monthly payments.
"I'm only here because this country gave me a chance through education," Obama said. "We are here today because we believe that in America, no hard-working young person should be priced out of a higher education."
Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family's income has increased only modestly, the memo said.
Now more students than ever are relying on loans to pay for college, it said, adding that some 71 percent of those earning a bachelor's degree graduate with debt, which averages 29,400 U.S. dollars.
Over the past several years, the Obama administration has worked to ensure that college remains affordable and student debt is manageable, including through raising the maximum Pell Grant award by nearly 1,000 dollars, creating the American Opportunity Tax Credit, and expanding access to student loan repayment plans, where monthly obligations are calibrated to a borrower's income and debt.
These income-driven repayment plans, like his "Pay As You Earn plan," aim to help individuals manage their debt, and pursue their careers while avoiding consequences of defaulting on a federal student loan, such as a damaged credit rating, a tax refund offset, or garnished wages.