The White House describes the changes:
Today, the Obama Administration announced it is taking steps to increase college affordability by making it easier to manage student loan debt. The announcement is part of a series of executive actions to put Americans back to work and strengthen the economy because we can’t wait for Congressional Republicans to act.
The Administration is moving forward with a new “Pay As You Earn” proposal that will reduce monthly payments for more than one and a half million current college students and borrowers. Starting in 2014, borrowers will be able to reduce their monthly student loan payments to 10 percent of their discretionary income. But President Obama realizes that many students need relief sooner than that. The new “Pay As You Earn” proposal will allow about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments. Additionally, starting this January an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates. …
Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option. Students can find out if they are currently eligible for IBR at www.studentaid.ed.gov/ibr. Last year, the President proposed, and Congress enacted, a plan to further ease student loan debt payment by lowering the IBR loan payment to 10 percent of income, and the forgiveness timeline to 20 years. This change is set to go into effect for all new borrowers after 2014–mostly impacting future college students.
In the realm of economic stimulus proposals, none is as audacious, as Machiavellian, and as transparently designed to buy the votes of a critical electoral demographic than the proposal to forgive all student loans. Even if it fails, as it likely will, the seamless coordination between members of Congress, leftist advocacy groups, and the media to try to sell this idea is a perfect example of how brilliantly certain factions play their hand in the high-stakes game of crafting the dominant political narrative.
Launched into the teeth of the Occupy Wall Street movement, where unemployable art history majors share tents with urine soaked street bums, Rep. Hansen Clark’s (D-Mich) bill to forgive outstanding student loans is finding strong resonance among young people who want their voices heard. Those protesting bailouts are now shouting, “I Want Mine.”