Rising consumer debt, particularly among students, has led President Barack Obama to order the expedition of a cap on federal student loan repayments this week.
The "Know Before You Owe" plan will cap repayments at 10 percent of discretionary income and will go into effect this January, two years before the cap was due to take effect under federal law, the Washington Post reports. The program could help up to 1.6 million student borrowers reduce their payments by as much as a couple of hundred dollars per month. Remaining debts would be forgiven after 20 years, five years earlier than the current law, the president said. "Living with that kind of debt means making some tough choices when you're first starting out," the president said at the University of Colorado's Denver campus on Wednesday. "When a big chunk of your paycheck goes to student loans, that's painful not just for the middle class but it's harmful for our economy because that money's not going to help businesses grow." Last week, the Federal Reserve Bank of New York reported the total volume of student loan debt is now greater than credit card debt for the first time ever.