A new federal program should make it easier for some recent college graduates to keep their student-loan payments manageable.
The "Pay as You Earn Repayment Plan" lets eligible borrowers sharply lower their monthly loan payments and qualify for loan forgiveness quicker than they might otherwise.
The program limits student-loan payments to 10% of "discretionary income" as defined by government formulas. Borrowers who make regular payments could have the remaining unpaid amounts forgiven after 20 years. Those with public-service jobs may qualify for loan forgiveness after just 10 years.
Monthly payments can increase or decrease each year based on the borrower's income and family size.
Pay as You Earn is available only to borrowers with federal direct student loans, but other borrowers can consolidate existing federal student loans into a direct loan to take advantage of the program, provided they meet other requirements.
The U.S. Department of Education's Pay As You Earn calculator, at studentaid.gov, can help borrowers determine if they qualify.
courtesy of: http://online.wsj.com
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