President Obama proposes expanding income-based repayment of student loans: Debtors would pay 10 percent of their discretionary income, down from 15 percent, and the loan balance would be forgiven after 20 years instead of 25. The changes will help borrowers with expensive graduate or professional degrees and lots of debt, concludes Safety Net or Windfall?, a New America Foundation analysis.
A borrower with an MBA or a law degree can easily have a six-figure loan balance forgiven, even if his income exceeds $100,000 for much of his repayment term.
The report recommends changes to target benefits to borrowers with lower incomes. The plan is expected to go into effect by the end of the year.