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The '''Pay As You Earn''' program was passed into law on December 21, 2012. It serves as an improvement to the [[Income-Based_Repayment|Income-Based Repayment (IBR)]] program by lowering the cap of loan payments to 10% instead of 15% and the years of payment to 20 instead of 25.<ref>[http://gladvisor.com/additionalinformation.aspx#paye PAYE | Gladvisor.com]</ref>
The '''Pay As You Earn''' program is a United States federal program that was passed into law on December 21, 2012. It differs from the [[Income-Based_Repayment|Income-Based Repayment (IBR)]] program by lowering the cap of loan payments to 10% instead of 15% and the years of payment to 20 instead of 25.<ref>[http://gladvisor.com/additionalinformation.aspx#paye PAYE | Gladvisor.com]</ref> It was the first student debt relief law signed by President [[Barack Obama]].<ref>[http://blogs.wsj.com/totalreturn/2012/11/05/a-new-student-loan-program-launches/ A New Student-Loan Program | blogs.WSJ.com]</ref>

It was the first student debt relief law signed by President [[Barack Obama]].<ref>[http://blogs.wsj.com/totalreturn/2012/11/05/a-new-student-loan-program-launches/ A New Student-Loan Program | blogs.WSJ.com]</ref>


==Who Qualifies==
==Who Qualifies==
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*Private Loans
*Private Loans
*Parent Plus Loans<ref>[http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn Loans That Are Not Eligible | Studentaid.ed.gov]</ref>
*Parent Plus Loans<ref>[http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn Loans That Are Not Eligible | Studentaid.ed.gov]</ref>

==Ticking Tax Bomb==
Someone will have to cover the borrowers' debts, but that is "not a big part of the policy discussion in Washington at the moment."<ref>[http://www.nytimes.com/2012/12/15/your-money/for-student-borrowers-a-tax-time-bomb.html?pagewanted=all&_r=0 For Student Borrowers, Relief Now May Mean a Big Tax Bill Later]</ref>


==References==
==References==
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{{reflist|2}}
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==External links==
==External links==
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*[http://www.finaid.org/loans/publicservice.phtml/ Financial Aid]
*[http://www.finaid.org/loans/publicservice.phtml/ Financial Aid]
*[http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn/ Student Aid]
*[http://studentaid.ed.gov/repay-loans/understand/plans/pay-as-you-earn/ Student Aid]


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[[Category:Student financial aid]]
[[Category:Student financial aid]]

Revision as of 22:17, 13 February 2014

Template:Unreviewed


The Pay As You Earn program is a United States federal program that was passed into law on December 21, 2012. It differs from the Income-Based Repayment (IBR) program by lowering the cap of loan payments to 10% instead of 15% and the years of payment to 20 instead of 25.[1] It was the first student debt relief law signed by President Barack Obama.[2]

Who Qualifies

Only borrowers who do not have outstanding federal loan debt as of October 1, 2007 may qualify if they receive a disbursement on a loan on or after October 1, 2011. As with Income-Based Repayment (IBR), the borrower must prove Partial Financial Hardship.[3] Some have criticized the October 1, 2007 cut-off as being an arbitrary and unfair distinction. [4] But others have criticized PAYE as being too generous, particularly for student borrowers pursuing careers in traditionally high-paying professions like medicine, law, and business. [5] Even some members of Congress have not fully grasped the magnitude of generosity of income-based repayment programs. During a Congressional Hearing, Rep. Raúl Grijalva (D-Ariz.), a member of the House Workforce and Education Committee, stated, "I'm still trying to get my head around some concepts that I heard today," he said, "that irrespective of the amount of money you borrow or the interest rate, that you'll still end up paying the same amount." "Wow, somehow that doesn't seem possible," said Republican Rep. John Kline of Minnesota, the committee chairman. [6]

Eligible Loans

  • Direct Subsidized and Unsubsidized Loans
  • Direct Plus Loans for Graduates and Professionals[7]

Not Eligible Loans

  • Private Loans
  • Parent Plus Loans[8]

References

  1. ^ PAYE | Gladvisor.com
  2. ^ A New Student-Loan Program | blogs.WSJ.com
  3. ^ Pay as You Earn | Studentaid.ed.gov
  4. ^ AutoAdmit.com
  5. ^ Obama's Loan-Repayment Plan Will Be 'Windfall' for Wealthy, Report Says | The Chronicle of Higher Education
  6. ^ Student Loan Borrowers Leaving Lots of Money on the Table | CNBC.com
  7. ^ Eligible Direct Loans | Studentaid.ed.gov
  8. ^ Loans That Are Not Eligible | Studentaid.ed.gov
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