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The new repayment plan of student debt, announced by President Obama in October 2011, (see ACA Newsletter – Education Europe, October 2011) has finally seen the light of day. The Pay as you Earn plan is meant to ease student debt repayment, by capping the payments for the Federal Direct Student Loans at 10% of discretionary income for eligible borrowers. The Department of Education estimates that about 1.6 million borrowers would benefit from the scheme. The borrowers that do not meet the eligibility criteria could still take advantage of the Income-Based Repayment scheme, which caps monthly repayments at 15% of discretionary income, used already by close to 1.3 million people.
In the same direction of trying to ease the burden for student loan holders, the Department of Education also recently launched an online application that allows borrowers that already have a student loan to compare monthly payments under different repayment schemes, trying to help them to make more informed decisions when selecting a plan.US Department of Education