Thanks to the efforts of the United States Department of Education and the will of President Barack Obama, repaying college loans has become just easier with the implementation of a reconfigured loan repayment scale.

The Pay As Your Earn plan can drastically reduce the monthly loan repayments for millions of current and former students. According to the education department, this repayment option follows through on Obama’s pledge to provide relief for many Americans saddled with back-breaking student loans in a volatile economy.

Obama first spoke of payment relief in October 2011, and the program caps payments of federal direct student loans at 10 percent of discretionary income for eligible borrowers; the education department believes that roughly 1.6 million borrowers could be impacted by this new program.

“In a global economy, putting a college education within reach for every American has never been more important,” said Obama when the relief was first announced. “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.”

According to the White House, current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option. In 2010, Obama proposed, and Congress enacted, a plan to further ease student loan debt payment by lowering the income-based relief loan payment to 10 percent of income, and expand the forgiveness timeline to 20 years. This change is set to go into effect for all new borrowers after 2014 — mostly affecting future college students.

“This new option complements additional repayment plans the department offers to help borrowers manage their debt, including income-based repayment, which caps monthly loan payments at 15 percent of a borrower’s discretionary income,” read an explanatory note from the education department. “Borrowers who are not eligible for Pay As You Earn may still qualify for income-based repayment, which more than 1.3 million borrowers already use.”

In its decision, education department officials found that while most individuals can and do repay their loans, a significant segment of borrowers — including teachers, nurses, first-responders and individuals working in lower-wage public service careers — are encountering difficulties in making payments; the “Pay As You Earn” program is specifically designed for borrowers to avoid their loans going into default, and to get these borrowers back in good standing by provide them with a relaxed payment scale.

“We know many recent graduates are worried about repaying their student loans as our economy continues to recover,” said United States Department of Education Secretary Arne Duncan, “and now it’s easier than ever for student borrowers to lower monthly payments and stay on track.”

The education department has also unveiled several other loan repayment plans, including the launch of an online application which allows borrowers to compare interest rates and loan payoff dates for several income-driven repayment plans, and any borrower with at least one Direct Loan or Federal Family Education Loan is eligible for the tool, available at

“In addition, the [education department] has developed resources such as the Financial Awareness Counseling Tool, which helps borrowers better understand their loan obligations and manage their finances,” read a statement from the education department, referencing the other tools available at “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.”


Contact staff writer Damon C. Williams at (215) 893-5745 or

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