Don't Let Student Loan Debt Get You in Trouble

President Barack Obama signing a memorandum.

PRESIDIO OF MONTEREY, Calif. -- At a time when a college education has never been more important, it has never been more expensive. 

In the last 30 years, the average tuition at a public four-year college has tripled, according to a White House release. Accumulating too much student loan debt can present new college graduates with overwhelming monthly payments, subjecting them to a risk of default, poor credit, and other adverse financial consequences. But knowing the options available to mitigate this risk can pay both literal and figurative dividends down the road.

To help address the issue, President Barack Obama signed a presidential memorandum June 10 directing the secretaries of the treasury and education to take action to reduce the financial burden on those with student loan debt.

Programs already in place, such as the Income-Based Repayment and Pay As You Earn options, allow certain borrowers to cap their student loan payments at 10 percent of their income and receive loan forgiveness after 20-25 years in repayment. However, the rising cost of tuition is leaving many middle-income earners--who are ineligible for these programs--with a tremendous amount of student loan debt with unmanageable monthly payments.

The new direction from the White House gives the secretary of education until June 9, 2015, to propose regulations expanding the access to the Pay As You Earn Plan to as many as 5 million additional borrowers, according to the White House website. These regulations are to take effect by December 31, 2015, the website says. As tuition has risen much higher and quicker than income in the United States, this expansion will allow more borrowers to cap their monthly payments at 10 percent.

Eligible borrowers and loans vary by program. The Pay As You Earn program requires that you must be suffering from a partial financial hardship and covers only Direct subsidized and unsubsidized loans, Direct PLUS loans made to students, and Direct consolidation loans made to students, according to the Department of Education.

For more information about the president's plan to expand repayment options, visit To learn about current repayment options, calculate your repayment under a particular plan, or learn how to apply for repayment under a different plan, visit

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