Pesident Barack Obama has signed an executive order that will allow millions of previously ineligible student debtors to qualify for the “Pay as You Earn” repayment program, which caps payments on student debt at 10 percent of monthly income and forgives outstanding balances after 20 years of repayments.
Obama’s order could open the benefit to as many as five million borrowers. Previously, in order to be eligible, borrowers could not have taken out loans before October of 2007, and could not have stopped borrowing before October of 2011. Earlier reports said the option will not become available to existing borrowers until December 2015.
Obama also said he will renegotiate contracts with Sallie Mae and other student debt servicers. Last month, Sallie Mae agreed to pay nearly $100 million for allegedly keeping American military service members from receiving lower interest rates while on active duty, prompting some to call for the government to cancel its contract.