Paying off College debt seems like an impossibility, but there is still hope. President Obama has announced the “Pay As You Earn” plan to make student loans more affordable for students. The plan will cap repayments for student federal loans at 10 percent of a graduate’s discretionary income. It will also reduce interest and allow graduates to consolidate multiple loans. Students who qualify will be forgiven their loans after 20 years. The current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years.
According to “Pay As You Earn,” starting in January 2012, students will be able to consolidate their federal loans under one monthly payment and get a 0.5% reduction in interest rates.