New plan to help make paying back student loans easier
On Friday Dec. 18, the Department of Education announced an expansion of the Pay As You Earn loan repayment plans that will assist students repaying student loans in an easier, more user-friendly experience.
When using PAYE plans, borrowers who need help with their debt can reduce monthly payments to as low as no cost, and students would never have to pay more than 10 percent of their income toward student loan payments.
Students can use the repayment estimator provided by www.studentloans.gov in order to see how much their monthly payments can be cut under PAYE. Borrowers can use this tool when they are beginning the repayment of federal student loans for the first time or for exploring repayment options based on their income.
“Five years ago, I announced a program that gives people the chance to cap their student loan payments at 10 percent of their income,” President Obama said in a note addressed to users of mint, a personal finance company managed by Intuit that assists students with loans. “Today, we’re expanding it so that millions more can pursue their dreams without having to worry about making ends meet.”
In addition to introducing the PAYE system to borrowers, Obama has doubled investments in college scholarships by expanding Pell Grant and the American Opportunity Tax Credit programs. Obama’s investment was geared to make student loans more affordable by slashing interest rates as well as call for two years of free community college for hardworking students.
Other income-driven repayment plans include the IBR plan, which includes a payment amount of around 10 percent of the borrower’s discretionary income if they are a new borrower on or after July 1, 2014 or around 15 percent if not a new borrower on or after that date.
To sign up for the PAYE program or to learn more about other repayment plans, borrowers can visit www.studentaid.ed.gov.