As we have written about before on our personal bankruptcy blog, one of the most bedeviling types of debt for consumers is student loan debt. This is because it can be very difficult to wipe out student loan debt in bankruptcy, unlike other forms of debt such as credit card debt. As a result of this difficulty, there has been a lot of discussion in the halls of Congress and in the White House about how to relieve some of the pressure people feel with student loan debt — which, these days, can easily reach $100,000 or more.
This week, President Obama announced an expansion to a plan to help many Americans afford their student loan payments. The program is called Pay As You Earn. Rather than having payments of a fixed amount due, the program caps monthly payments at 10 percent of a given borrower’s discretionary income. Without this rule, some recent graduates with low-paying jobs would owe just about everything they earn — and, in some cases, more — to student loans.
Until now, the program has been available only to those people who were borrowing for the first time on or after October 2007 and received a disbursement in October 2011 or later. The expansion of the program would make another 5 million borrowers eligible for the program.
Not everyone will benefit, though. People whose other debts are too much for their budget can still benefit from speaking with an experienced personal bankruptcy attorney who can help evaluate their situation.
Source: Reuters, “New Student Loan Relief Plan Leaves Many Out in the Cold,” Liz Weston, June 10, 2014