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Expansion of Student Loan Repayment Options

The new student loan repayment program signed by President Obama this past June, allows for more borrowers to seek relief for student loan debt. This program, "Pay As You Earn" (PAYE), caps the monthly repayments for student loan debt at 10 percent of income and any balance after 20 years will be forgiven.

Even though this program has been available since 2012, the president signing the order widens the pool of borrowers who are eligible for the program. Those who qualify are: borrowers that took out loans prior to October 2007, or those who have stopped borrowing by October 2011. However, this new pool expansion will not be available until late 2015.

For those who need an affordable repayment option now there is income based Repayment (IBR), where this past July a new version of IBR was enacted for new borrowers, who took their first loan July 1st of this year or after; they will have 10 percent of their income capped and a 20 year discharge period. If borrowers have order loans they could be eligible for IBR "classic", where there is a 15 percent cap on income for monthly repayment and a 25 year discharge period. IBR qualifies for both Direct loans and private loans, but 'Pay as you earn' (PAYE), is only available for Direct Federal Loans.

When a borrower is deciding if income repayment plans are the right option for them, they should see if their total debt exceeds their annual salary. If it does not, then this type of repayment option for student loan debt might not be best suited for their situation.

If you feel you need an affordable way to pay off student loan debt, you might want to look into such programs as Income Based Repayment or the new 'Pay as you earn' (PAYE) program. Contacting an attorney who specializes in student loan debt will be helpful in guiding you to paying off your debt quickly and in a way that is affordable to your budget.

Work Cited:

Carrns, A. (2014, August 25). 'Pay as you earn' program to help more. Tampa Bay Times, p. 4B.

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