Obama Takes Executive Action on Student Loans

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(From The Chronicle of Higher Education)

On the eve of a Senate fight over student-loan refinancing, President Obama is taking executive action to ease students’ debt burdens.

At a White House event on Monday, Mr. Obama will announce that he will expand a law that caps borrowers’ loan payments at 10 percent of their income to individuals with older loans—those who borrowed before October 2007 or stopped borrowing by October 2011.

The president will also announce plans to renegotiate contracts with federal student-loan servicers to provide them with financial incentives to keep students out of default. The percentage of students defaulting on their loans within two years of graduating reached 10 percent last year, the highest rate in nearly two decades.

Matt Lehrich, a White House spokesman, estimated that an additional five million borrowers would qualify for lower payments under the president’s plan.

It’s unlikely that many borrowers will enroll, however. While students’ debt levels are at an all-time high, enrollment in income-based repayment plans has remained stubbornly low, at roughly 11 percent of borrowers. And the new relief won’t be immediate, either—struggling borrowers will have to wait until the end of 2015, to give the Education Department time to issue new regulations.

In an effort to increase participation in income-based plans, the administration has been conducting an aggressive outreach campaign.Last fall the Education Department emailed more than three million borrowers to notify them that they might be eligible for income-based repayment. In January the administration announced an agreement with lntuit Inc. to include a banner on its TurboTax tax-preparation website inviting users to learn more about their repayment options.

Meanwhile, the department’s student-loan servicers have come under fire from regulators and consumer advocates for failing to notify borrowers of all their repayment options and benefits.

Slim Chances for Senate Plan

Monday’s announcement comes as Senate Democrats are gearing up for a vote on legislation introduced by Sen. Elizabeth A. Warren, Democrat of Massachusetts, that would allow struggling borrowers to refinance their debt at lower interest rates. The idea has populist appeal, but it won’t get much support from Senate Republicans, who have blocked similar bills by Democrats.

In an email a Senate Republican aide hinted that a filibuster was possible, saying there was “deep discussion” within the party on a strategy for how to proceed.

“We’d be happy to engage in an honest debate,” the aide wrote, requesting anonymity in order to speak frankly about the matter. But since Senate Democrats “won’t let us offer amendments, it’s hard to have a debate on a bill when we can’t mount an effort to change this deeply flawed bill.”

“This is obviously just a political stunt,” he added.

Even if Senator Warren’s measure does pass the Senate, it is unlikely to win approval in the Republican-controlled House of Representatives, which opposes plans to pay for the measure through a tax increase on millionaires. That means President Obama’s executive action—however incremental—could be the best news struggling borrowers get this election year.

Borrowers with questions about the plan can ask the president himself. He’ll answer them live on Tuesday, in his first Tumblr Q&A.

New $75 Million GEAR UP Competition Announced

U.S. Department of Education

Office of Communications & Outreach, Press Office  

400 Maryland Ave., S.W.

Washington, D.C. 20202     

FOR IMMEDIATE RELEASE:

June 3, 2014

CONTACT:  Press Office, (202) 401-1576 or press@ed.gov

U.S. Department of Education Announces $75 Million GEAR UP Competition

To focus on building successful practices aimed at improving college fit and college readiness for underrepresented, underprepared and low-income students across the country, the U.S. Department of Education announced today the availability of $75 million for two new Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) competitions.

At the Obama Administration’s College Opportunity Summit earlier this year, the Department made several commitments to support low-income students and help more of them pursue a path to college success. The GEAR UP program helps to ensure that all students achieve the necessary milestones that provide a pathway to a strong future. Today, the Department is acting on its pledge to focus this year’s GEAR UP college preparation program on improving both college fit and readiness, so all students graduate from high school prepared for college without needing remedial courses and enroll in an institution that will help them maximize their success.

“College prep programs like GEAR UP can make all the difference in whether many young people from disadvantaged families can pursue a higher education,” U.S. Secretary of Education Arne Duncan said. “These grants will help provide the mentoring, resources and financial aid that will offer thousands of students the additional support they need to achieve success in postsecondary education.”

In addition to focusing on college fit and readiness, the Department is tailoring this year’s GEAR UP grants to focus on projects that are designed to serve and coordinate with a Promise Zone, which are high-poverty communities where the federal government has partnered and invested to create jobs, leverage private investment, increase economic activity, improve educational opportunities, and improve public safety. This year’s GEAR UP program also places a priority on helping to improve students’ non-cognitive skills and behaviors, including academic mindset, perseverance, motivation, and mastery of social and emotional skills that improve student success. The grants are part of the Department’s focus on increasing the equity of opportunity in America’s schools so that every child – no matter his or her zip code – has a clear path to the middle class. The nation’s schools, teachers, and students have made significant gains, but despite this solid progress, wide gaps of opportunity and achievement continue to hurt many minority, low-income, and other underserved students.

Created in 1998, the grant program has provided funding for academic and related support services to eligible low-income middle and high school students, including students with disabilities, to help them obtain a high school diploma and succeed in college.  GEAR UP provides six-year grants to states and partnerships to offer services at high-poverty middle and high schools, as well as to provide college scholarships to low-income students.

GEAR UP grants currently fund 87 programs that serve approximately 420,000 middle and high school students across the country.

Applications are due by July 7, and grants will be awarded by the end of September. The Department will post further information on the GEAR UP Web page.

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