CAPE GIRARDEAU, MO (KFVS) - President Obama is looking to make student loans a little more affordable with a new executive order.
On Monday, he signed an order that would amend student loan regulations to allow for a payment ceiling. It will cap payments on student debt at 10 percent of your monthly income. Furthermore, any loans left after 20 years will be be wiped out.
The order will help an additional 5 million borrowers.
According to The White House, 71 percent of of those earning a bachelor's degree graduate with debt. It averages nearly $30,000.
"While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement," the office of the vice president said in a news release.
Local financial advisor Derieck Hodges said the order will help in the short term by making payments on student loans more manageable. However, he said there is a bigger issue at hand.
"One of the problems we've had is a lot of people have come out of school and they're not getting the jobs that they thought they were going to get, they're not making the money they expected in their career field or their not even working in their career field. And I think that's where the struggle is," Hodges said.
Hodges said in the long run, this executive order might not be as helpful. Interest on the loans adds up the longer it takes borrowers to pay them off, making the loans less manageable.
Hodges offered some advice for students who are getting ready to start college and those who are entering the job market.
- Budget your money - pay off student loans just like you would any other bill.
- If you can afford it, make larger payments each month so the interest doesn't add up.
- If you're in school now, look for ways to reduce college costs, like scholarships and grants.
- And pick a degree that is hiring.
The latest executive order does not apply to private student loans, like the ones you might take out from Wells Fargo or Sallie Mae. It only covers federal student loans.
The new plan should be available to borrowers by December 2015.