On October 25, 2011, the Obama Administration announced it is taking steps to increase college affordability and to support aspiring entrepreneurs by making it easier to manage student loan debt.
According to the White House press release, “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, as the White House notes, 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 (2012) an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates.
“In a global economy, putting a college education within reach for every American has never been more important,” President Obama said. “But it’s also never been more expensive. That’s why today we’re taking steps to help nearly 1.6 million Americans lower their monthly student loan payments. Steps like these won’t take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference. And until Congress does act, I will continue to do everything in my power to act on behalf of the American people.”
“College graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money by consolidating their debt and capping their loan payments. And we can do it at no cost to the taxpayer,” said U.S. Secretary of Education Arne Duncan.
In addition, the U.S. Small Business Administration, as part of the White House-led Startup America initiative, has launched a website to walk young entrepreneurs through the process of reducing their monthly student loan payments.
Also, in response to the President’s call to action to promote high-growth entrepreneurship across the country, today the Young Entrepreneur Council’s new private-sector Gen Y Fund has committed to investing $10 million in as many as 100 Millennial-generation startups, including a promise to pay down any of these young entrepreneurs’ remaining federal student loan obligations over the next three years.
The White House’s initiatives are intended to aid aspiring entrepreneurs whose student debts might otherwise discourage them from starting businesses. The Obama Administration’s efforts to lower loan payments may make some of them more likely to start companies instead. According to media reports, the Young Entrepreneur Council is also pushing for legislation that would expand loan deferments and forgiveness specifically for entrepreneurs.
Attorneys at I.S. Law Firm are dedicated to helping small businesses and young entrepreneurs. Please contact us for a consultation today: (703) 527-1779 or via e-mail: law@islawfirm.com.
