U.S. college graduates will soon be able to cap their loan payments at 10 percent of their income and stop paying after 20 years, the White House said.
The loan terms were originally to go into effect in 2014, but Obama moved them to January in an executive-branch action so cash-strapped current students would benefit, not just future students, the White House said ahead of Obama's announcement of the "Pay as You Earn" changes at the University of Colorado, Denver, at 10:45 a.m. MDT (12:45 p.m. EDT) Wednesday.
The existing income-based repayment plan with a "Pay as You Earn" option lets graduates cap their payments at 15 percent of their discretionary income and forgives all remaining debt after 25 years.
The timeline change will help about 1.6 million college students, the White House said.
Obama was expected to announce another change, effective from January to June 2012, to let about 6 million graduates bundle together Federal Direct Student Loans and Federal Family Education Loans -- the top two higher-education, low-interest loan programs -- so they can have a single monthly payment, rather than two, and get a half-percent interest-rate cut.
The savings to pay for the lower loan rate would come from the lower cost of administering the combined loan, Education Secretary Arne Duncan said Tuesday.
Combining the loans into a single payment would also reduce the chance of default, the White House said.
"Steps like these won't take the place of the bold action we need from Congress to boost our economy and create jobs, but they will make a difference," Obama said in a statement.
More than 36 million Americans have federal student-loan debt, but only 450,000 have taken advantage of income-based repayment plans, the White House said.
Students can find out if they are eligible for such plans at www.studentaid.ed.gov/ibr.
Obama's executive-branch action Wednesday would be the third such move he made in three days, after actions to aid homeowners and increase hiring of military veterans.
All three are part of a "We can't wait" campaign to pressure Republican lawmakers to support the job-creation package he proposed after Labor Day, the White House said.
"We can't wait for Congress to act, so we're going to take the steps that we can take," White House Communications Director Dan Pfeiffer said Monday.
Senate Minority Leader Mitch McConnell, R-Ky., said through a spokesman the White House claims "the economy is being held back because Congress hasn't acted, [but] the opposite is true -- and we're now living under those policies."
Obama is ending a three-day Western trip during which he also held fundraising events in Denver, Las Vegas, Los Angeles and San Francisco.
Obama was to fly back to Washington after the Denver loan announcement, returning to the White House at 5:10 p.m. EDT.