The Management of Student Loan Debt Has Become More Affordable

July 8, 2009

Student loan debt has become more manageable because it will be based on a student’s income, not a fixed amount, which many may not be able to afford.

The program called, Income-Based Repayment (IBR), will allow borrowers just that: to pay back their student loans based on their incomes (no more than 15 percent), so students don’t have to decide to only work certain, high-paying jobs.

“This help couldn’t be coming at a better time for borrowers in this tough economy, or for current and future students facing an escalating college affordability crisis,” said U.S. Rep. George Miller (D-CA), chair of the House Education and Labor Committee. “These benefits will make a serious difference for students and families working very hard to pay for college, and will provide millions of borrowers more flexibility in choosing a career they truly desire rather than one made necessary due to crippling student debt.”

Under the program, the repayment of a student loan will be recalculated each year. And this program is up to individual banks to make the decision of whether or not they want to participate. Also, interests charges could be increased. In some instances, after 25 years of repayment, a student could have his or her loan forgiven. For borrowers who are in the public-service sector, their loans can be completely forgiven after 10 years.

Please visit federal student aid for the repayment calculator and for more information.