A federal plan comes this month to college students and former students struggling to pay their student loans. The “Pay As You Earn” plan allows people to adjust their student loan payment according to their income and family size.
People eligible for the program can cap their monthly payments to 10 percent of their discretionary income. The loans can be forgiven after 20 years if all payments are made on time.
The program takes effect December 21 and is limited to students with direct subsidized loans, direct unsubsidized loans, grad students with direct PLUS loans, or direct consolidation loans without underlying PLUS loans made to parents.
The program is only applicable to students who began their student loans as of Oct. 1, 2007 and received a disbursement as recently as Oct. 1 2011.
Details of the program and eligibility requirements are available from the loan service provider handling the student‘s account.