Eligible borrowers of federal student loans will able to enroll in President Obama's "Pay as You Earn" program starting on December 21, the Department of Education is expected to officially announce on Friday.
The new income-based repayment plan caps monthly loan payments at 10 percent of a borrower's discretionary income. After 20 years of payments, the government will forgive the loans. Now the Education Department's income-based repayment program caps monthly loan payments at 15 percent of discretionary income, with loan forgiveness after 25 years.
The program will accept enrollees who were new borrowers after October 1, 2007, and who also took out a loan on or after October 1, 2011.