Student loan borrowers may soon find relief - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

Student loan borrowers may soon find relief

Amarillo, TX - President Obama recently announced the expansion of a program called "Pay As You Earn" for student loan borrowers.  

The "Pay As You Earn Program" has been around since 2012 allowing students to pay nothing up front and a percentage of their income after graduation.  

With the recent announcement Mr. Obama made, it could open the benefit to as many as five million borrowers.

Earlier this week President Obama signed an executive order that will allow millions of previously ineligible student loan borrowers to qualify for the "Pay As You Earn" repayment program.

Six months after graduation, students are expected to start paying back their loans.

This plan will allow borrowers to cap their loan at 10% of their income.

Some students say it's a sigh of relief.

"It would change my life a lot, it would definitely get rid of some debt and being a single mom, that would be amazing." says Sabre Young, student.

"It will help my child, he will be affected and I know that he's been out of college for quite awhile and is having a hard time paying back those loans." says Shelly Edwards, student.

This program will not only make loans more affordable, they can actually disappear.

The balance of a loan is forgiven after 20 years or 10 years if the borrower works in public service which means, for the government or a non profit.

According to national reports, some 40 million Americans have outstanding student loan debt totaling 1.2 trillion dollars.

The Director of Financial Aid at the Amarillo College says not paying your student loans can affect future investments.

"Default can affect their future, because they won't be able to qualify for a house or a car or you know their tax return can get garnished so, definitely they want to avoid the consequences that default." says Kelly Prater, Director of Financial Aid at Amarillo College.

And for the students who plan to use loans in the future they are already eligible.  

The option will not become available to existing borrowers until December 2015.

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