WASHINGTON, D.C.—The U.S. Department of Education has introduced a new student loan repayment plan, which caps monthly payments based on income and could lower monthly payments for many students. "Pay As You Earn" caps payments of Federal Direct Student Loans at 10 percent of income for eligible recent graduates, resulting in lower monthly payments. As many as 1.6 million borrowers may find relief through this program.
The Department of Education now offers multiple repayment options to aid in managing federal student loans. More than 1.3 million borrowers already use the Income-Based Repayment plan, which caps monthly payments at 15 percent of income.
The Department of Education recently launched an online application that allows borrowers to compare their estimated monthly payments under different income-driven repayment plans and make an informed choice in their repayment plan selection. The electronic application is available to borrowers who have at least one Direct Loan, or a loan in the Federal Family Education Loan program that is eligible to be repaid under one of the income-driven plans. Borrowers can access the electronic application either through their loan servicer’s website or by logging on to http://www.studentloans.gov/.
The department also has an online resource such as the Financial Awareness Counseling Tool, which helps borrowers better understand their loan obligations and manage their finances. The interactive tool provides students with basic financial information, helps borrowers establish a budget based on their individual circumstances, and offers repayment tips and strategies to avoid default. Visit http://www.studentaid.gov/
Delegate Madeleine Z. Bordallo (D-GU) said: “I applaud the Department of Education for addressing the very serious and difficult issue of student loan repayments in the current economic environment,” said Congresswoman Bordallo. “The programs are innovative and recognize that it is important to give our students avenues to encourage their education and responsible repayment. I encourage students to identify the best payment plan for them, in order to reduce payments and successfully manage their debt. While these tools are helpful, we must continue to look at broader policies that will help address the ballooning costs of higher education. I look forward to continue working with Secretary Duncan to ensure that a college education is accessible for all students.” (PR)