On November 1, President Barack Obama put the final touches on the Pay As You Earn program for the repayment of student loans. It is an Income-Based Repayment (IBR) that is applicable for federal student loans and those who are struggling to make monthly payments in a sluggish economy.
The program actually began in 2007, but student loan debt has continued to rise. Historically, the program has not been popular with students-only slightly over 1 million borrowers were enrolled this year. The Obama administration is hoping the recent tweaks will make the program more popular. The cap on loan payments was reduced from 15 percent of the borrower’s total income to 10 percent. Loan forgiveness is accelerated from 25 years to 20 years.
If a borrower implements all of these changes, they can capitalize on a 33 percent reduction in their monthly payments. These changes could be valuable in reducing the number of persons filing bankruptcy due to student loan debt. This will allow young professionals to establish their careers and pay off their loans in full. Getting rid of other debt through a bankruptcy can also help individuals pay back student loans faster.
Please visit our site for more information on student loan debt and bankruptcy , and contact our firm for a free consultation.
Benjamin Brand Services- Chicago bankruptcy lawyers .