President Barack Obama will issue an executive order Monday that will expand the “Pay as You Earn” student debt repayment plan to as many as five million borrowers who had previously been ineligible for the plan, the New York Times reports.
The Pay as You Earn plan caps repayments on federal student loans at 10 percent of debtors’ monthly income, but is not currently available to those who have taken out older loans—those who took out loans before October 2007, or who stopped borrowing before October, 2011.
Obama’s order would not go into effect until December of next year, the Times reports, to give the education department time to deal with putting it into place. That timeline would also give time for other elements of Obama’s student debt plans, as highlighted in his proposed 2015 budget, to already be in place before borrowers opt in to the program. That budget plan also involved extending the Pay as You Earn program.
The order will kickstart a busy week on the student debt front in Washington. A Democrat-led bill from Massachusetts Sen. Elizabeth Warren that would allow student debtors to refinance their loans at lower interest rates is expected to see the Senate floor this week. (The bill would involve new taxes on the wealthy.) And on Tuesday, Obama plans to answer questions about student debt and education costs submitted on the social networking site Tumblr.
Speaking to the Times, Democratic New York Sen. Charles Schumer framed Obama’s executive action serves in part as a hedge on the Senate bill, ensuring borrowers would at least see some good news this week. “Even though our bill goes further, the president’s action means something will be done even if Republicans block it,” Schumer told the Times.