A brief history of the income based repayment plan

Before the recent national elections on November 6, the two major candidates for president, Governor Mitt Romney and President Barack Obama, each touted, with varying clarity, plans to help future college graduates afford student loan repayment.

Governor Romney had discussed something along the lines of Personal Reemployment Accounts, an initiative that had been tried in a pilot program during the most recent Bush administration with little success. President Obama, however, proposed changes to an income based loan repayment plan (IBR) that was enacted alongside the College Cost Reduction and Access Act of 2007.

This act was passed with broad bipartisan support in the House and the Senate as it allowed eligible graduates to repay loans at 15 percent of their income with their loans being forgiven after 25 years. In his 2010 State of the Union address, Obama proposed lowering the terms to 10 percent of a graduates net income with forgiveness over 20 years. As well, he expanded eligibility by allowing students who had taken out loans as far back as 2008 to qualify for the 2010 modifications to the IBR.

On November 1, days before the election, the Department of Education (DOE) approved the new "pay-as-you-earn" program that expanded upon the IBR initiative proposed by the president.

"With graduates from the Class of 2012 starting to face their first student loan payments this month, today's news could not be more timely," said Lauren Asher, president of the Institute for College Access & Success (TICAS), a group who researches methods to make higher education more affordable, in a press release.

Students who are on the cusp of beginning to pay off their education will soon learn that they need to explore solid loan repayment plans. College Financing Group has advisors on hand who are knowledgeable about the available options for post-grads who need assistance with student loan repayment.