A new federal student loan repayment program, which is estimated to reduce monthly payments for more than 1.6 million college students and borrowers, will launch Friday.
Income-based repayment loan plans currently require students with outstanding loans to contribute 15 percent of their monthly income toward their loans, according to Daily Bruin archives.
The new program will lower the monthly rate to 10 percent of the borrower’s discretionary income, according to the Federal Student Aid website.
This means borrowers will pay less per month on their student loan debt.
Additionally, the federal government will forgive loans after 20 years if the borrower makes consistent payments, according to the website.
Before the Pay As You Earn plan, federal loans were forgiven after 25 years of consistent payments.
To qualify for the new program, students will need to have started borrowing after Oct. 1, 2007, and demonstrate partial financial hardship, according to the Federal Student Aid website.
Patricia Gandara, a professor in the UCLA Graduate School of Education and Information Studies, said she has noticed that high student loan debts tend to drive students away from public service jobs to those that pay more money.
William Chakar, a second-year molecular biology student, said the new plan will not impact him significantly because he expects to be able to pay back his federal student loans – approximately $11,000 so far. He is pursuing a career in medicine, which typically ranks among the highest paying professions.
Still, he said he appreciates the option of making a lower monthly payment on his loans through the Pay As You Go plan.
Gandara expects that the new 10 percent cap on repayments will be more fair to students than the current plan because it will allow them to choose jobs based on more factors than just their salary.
“Hopefully (Pay as You Earn) will make students able to make employment choices based on what they really want rather than to pay back a loan,” she said.
Compiled by Fiona Kirby, Bruin contributor.