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The Administration has made historic investments in Pell Grants and the American Opportunity Tax Credit to help make college more affordable for millions of current and future students. While college remains an excellent investment for most students, debt may discourage some potential students from enrolling, keeping them from getting the skills they need to compete in the global economy. Some borrowers may struggle to manage their bills and support their families. The need for enough income to make large monthly payments may discourage some graduates from starting a new job-creating business or entering teaching or another lower-paying public service career.
Today, the President announced a series of additional steps that the Administration will take to make college more affordable and to make it even easier for students to repay their federal student loans:
Help Americans Manage Student Loan Debt by Capping Monthly Payments to What They Can Afford
〈 Allow borrowers to cap their student loan payments at 10% of discretionary income. In the 2010 State of the Union, the President proposed – and Congress quickly enacted – an improved income-based repayment (IBR) plan, which allows student loan borrowers to cap their monthly payments at 15% of their discretionary income. Beginning July 1, 2014, the IBR plan is scheduled to reduce that limit from 15% to 10% of discretionary income.
〈 Today, the President announced that his Administration is putting forth a new “Pay As You Earn” proposal to make sure these same important benefits are made available to some borrowers as soon as 2012. The Administration estimates
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