Millions of grads to score lower student loan payments
In an attempt to help college grads deal with their education loans in a tough economy, the Obama administration has announced a new initiative to help Americans pay down their student loan debt. The “Pay As You Earn” program will allow some 1.6 million borrowers to reduce their monthly student loan payments.
“In a global economy, putting a college education within reach for every American has never been more important,” President Obama said. “But it’s also never been more expensive. That’s why today we’re taking steps to help nearly 1.6 million Americans lower their monthly student loan payments. 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. And until Congress does act, I will continue to do everything in my power to act on behalf of the American people.”
Under the proposal, people with student loans will be able to reduce their payments to 10 percent of their discretionary income starting next year and forgives any outstanding debt after 20 years. Last year, lawmakers passed a bill that will create those safeguards for borrowers, but it will not kick in until 2014. Currently, student loan payments are capped at 15 percent of a borrower’s income and debt forgiveness kicks in after 25 years.
“College graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money by consolidating their debt and capping their loan payments. And we can do it at no cost to the taxpayer,” said U.S. Secretary of Education Arne Duncan.
To find out if you are eligible for income-based student loan payments, visit the U.S. Department of Education’s Federal Student Financial Aid website.
