WASHINGTON POST: The Obama administration announced plans Tuesday to allow college graduates to cap their federal student loan repayments at 10 percent of their discretionary income starting in January, two years before the cap was due to take effect under federal law.
The accelerated “pay as you earn” program, which Obama will authorize through executive order, could benefit up to 1.6 million borrowers and reduce their payments by as much as a couple hundred dollars a month, administration officials said. All remaining debt on the federal loans would be forgiven after 20 years — five years earlier than under current law.
In addition, some borrowers who have more than one federal student loan will be allowed to consolidate their debt, in some cases reducing their interest rates by up to half a percentage point, officials said.
“These are real savings that will help graduates get started in their careers,” Education Secretary Arne Duncan said in a conference call with reporters. “These changes could make a big difference in the lives of current college students and recent graduates as they enter one of toughest job markets in recent memory.” … (more)
