The Obama administration announced a new "Pay As You Earn" proposal that will reduce monthly student loan payments for more than 1.5 million current college students and borrowers. Currently, borrowers will be able to reduce their monthly student loan payments to 10% of their discretionary income, beginning in 2014. The administration's new "Pay As You Earn" proposal will allow about 1.6 million students the ability to cap their loan payments at 10% starting next year. The plan will forgive the balance of their debt after 20 years of payments. Additionally, starting this January 2012, an estimated 6 million students and recent college graduates will be able to consolidate their loans and reduce their interest rates.
- An audiologist who is earning $45,000 and has $60,000 in federal student loans. Under the standard repayment plan, this audiologist's monthly repayment amount is $690. The currently available income based repayment (IBR) plan would reduce this audiologist's payment by $332 to $358. The President's "Pay As You Earn" plan will reduce the audiologist's payment by an additional $119 to $239—a total reduction of $451 a month.
- A speech-language pathologist who is earning $30,000 a year and has $25,000 in federal student loans.
Under the standard repayment plan, this SLP's monthly repayment amount is $287. The currently available income based repayment (IBR) plan would reduce this SLP's payment by $116 to $171. Under the administration's "Pay As You Earn" plan, the SLP's monthly payment amount would be $114. And, if this SLP remained a speech-language pathologist or was employed in another public service occupation, she would be eligible for forgiveness under the Public Service Loan Forgiveness Program after 10 years of payments.
Congressman John Kline (R-MN), Chairman of the House Education and the Workforce Committee, released a statement on President Obama's plan which said:
"Despite the administration's rhetoric, this plan will not create a single job, strengthen our economy, or promote fiscal responsibility. What this plan will do instead is encourage more borrowing across the board. That means more debt for students, more debt for taxpayers, and more red ink on the government's books."
For comments or questions about these announcements, please contact Neil Snyder, ASHA's director of federal advocacy, by phone at 800-498-2071, ext. 5614, or by e-mail at email@example.com.