WASHINGTON, Oct. 25 (UPI) -- The Obama administration said Tuesday it's starting a new program that would lower monthly payments on student loans.
A White House statement said the program is part of "a series of executive actions to put Americans back to work and strengthen the economy because we can't wait for congressional Republicans to act."
The new "Pay As You Earn" proposal would reduce monthly payments for more than 1.5 million college students and borrowers, the White House said. Under the program, starting in 2014, those borrowers will be able to reduce their monthly student loan payments to 10 percent of their discretionary income.
The "Pay As You Earn" proposal also will give about 1.6 million students the ability to cap their loan payments at 10 percent starting next year, and the plan will forgive the balance of their debt after 20 years of payments, the White House sad.
In addition, starting in January, an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates.
Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option, the White House said.
Students can find out if they are currently eligible for the Income-Based Repayment Plan at www.studentaid.ed.gov/ibr.