Important news! Starting December 21, 2013, there is a new plan taking effect for students to repay their college loans more easily and with less pain. The new program is called Pay as You Earn and will cap repayment of student loans at 10% of your discretionary income. Loans will also be forgiven after 20 years, after 10 if you are involved in public service and have paid all payments.
You are eligible for this program if you began taking federal loans after October, 2007, and had at least one disbursement after October, 2012. Eligibility ALSO requires that you qualify for partial financial hardship. Partial financial hardship is based on if your standard loan repayment exceeds a certain percentage of your income.
As of 2011, two thirds of the national college graduation class had student debt, the average debt being $26,600. Congress had scheduled a similar program to take effect in 2014 which would cap repayments at 15% of a student’s income and consider loan forgiveness after 25 years. The Obama administration took regulatory measures to make a better repayment option go into effect earlier to ease high college loan indebtedness.