An estimated 193,590 Pennsylvanians are eligible to benefit from the Pay As You Earn proposal in President Barack Obama’s student loans memorandum, according to a report issued by the White House on Tuesday.
The report, written by the White House Domestic Policy Council and Council of Economic Advisers, outlines the economic impact of student debt and includes data on the number of borrowers in each state that would qualify for either the executive action announced Monday or U.S. Sen. Elizabeth Warren’s Senate bill proposal. The latter -- which would enable about 25 million borrowers to refinance their student loans at lower interest rates -- goes to a vote today.
If the Senate bill is passed, the report notes, an estimated 1,223,000 borrowers in Pennsylvania would be eligible for loan refinancing.
There are currently 2,065,000 Pennsylvanians who have outstanding federal student loans, owing over $50 billion.
These numbers arrive on the heels of Mr. Obama’s presidential memorandum Monday afternoon. The state-by-state breakdown addresses the first part of this executive action, which extends the existing Pay As You Earn loan-repayment program to an additional five million borrowers.
Individuals who borrowed before October 2007 or stopped borrowing by October 2011 qualify for the plan, which expands on a law that caps loan payments at 10 percent of their income.
During a conference call with reporters Tuesday afternoon, White House Domestic Policy Council Director Cecilia Muñoz discussed the importance of improving college affordability and answered questions about how the executive plans will be funded.
"At a time when the college degree is so critical, it has never been more expensive,“ Ms. Muñoz said. ”College is absolutely worth it, and we all have a role to play in making it more affordable.“
She added that despite the rising costs of higher education, college is an investment accompanied by positive returns. Compared to individuals with only a high school diploma, holders of a Bachelor’s degree or higher earn $28,300 more in median annual income.
In response to several questions about how the White House will fund the programs outlined in the memorandum, Ms. Muñoz said she expects the actions will create economic benefits in the long-run, as opposed to being an economic burden.
She noted that it is too early to determine how many of the five million additional borrowers who qualify for loan repayment caps under the new action will in fact do so. This data will be filed once individuals begin to enroll for the benefits, effective December 2015.
Mark Kantrowitz, senior vice president and publisher of Edvisors Network, a company which publishes information about paying for higher education, said the five-million figure is exaggerated.
While he said the media attention that the memorandum has garnered will inform some borrowers, Mr. Kantrowitz estimated that the number of individuals who will take advantage of the new regulations is closer to a few hundred thousand.
"There is a lot of inertia among borrowers,” he said. “Unless they see a significant benefit, they might not make any changes to their loan program.”
Yanan Wang: firstname.lastname@example.org, 412-263-1949.