The White House steps in to help students in debt: What next?

President Obama expands debt relief program to millions burdened by student debt. Will it help?

June 9, 2014 2:35PM ET

by Inside Story Team @AJInsideStoryAM

Ray’s thoughts on debt relief for students

It is the end of commencement season and past deadline for the class of 2019 to give colleges their decisions.

Millions of Americans graduate with college debt. Economists worry about the effect their $1.2 trillion in combined debt is going to have on the country's future.

The president announced a set of new policies that could change students' borrowing behavior, their life trajectories and the economic impact of financing higher education.

President Barack Obama has issued an executive order on Monday to help as many as 5 million people with their federal student loan repayments. The order expands on a 2010 law called Pay As You Earn. It will continue to cap repayments at 10 percent of a borrower's monthly income.

Americans now owe more on student loans than they do on credit cards. And the outrage here is that they’re just doing what they’ve been told they’re supposed to do.

President Barack Obama

The order will open negotiations with student loan companies and expand efforts for borrower awareness programs. The order will take effect in December 2015; this will allow the Department of Education time to adjust. Speaking at the White House on Monday afternoon, Obama said that he has asked Congress for help in this effort but that his patience and that of people with student loans is waning. He said, "In this year of action, wherever I’ve seen ways I can act on my own to expand opportunity to more Americans, I have."

Relief for millions of Americans in education debt is the theme on Capitol Hill this week. The Senate plans to vote on a new bill Wednesday that would allow as many as 25 million borrowers to refinance their student loans, both federal and private, at lower rates.

There are people out there with a student loan debt at 6 percent, at 8 percent, at 10 percent and at even higher, depending on when they took out their loans ... This is an issue of our economy. We are here because it is an economic emergency.

Elizabeth Warren

senator, D-Mass.

The bill proposes reimbursing lenders for lost interest income through tax increases on the wealthy. The bill is unlikely to pass the Democratic-controlled Senate, and the Republican-controlled House of Representatives will almost certainly kill it.

Over the weekend, Senate Minority Leader Mitch McConnell told Politico, "This bill doesn't make college more affordable, reduce the amount of money students will have to borrow or do anything about the lack of jobs grads face in the Obama economy."