President Obama’s reference to student loan assistance in his Jan. 27 State of the Union address was brief: “And let’s tell another 1 million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years – and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.”
The president’s plan refers to changes to Income-Based Repayment (IBR), a provision of the College Cost Reduction and Access Act that provides relief for those with high student debt. According to CCRAA expert Heather Jarvis of Equal Justice Works, “IBR allows for much reduced monthly student loan payments for those with high debt-to-income ratios. President Obama proposes lowering the cap on federal student loan payments from 15 to 10 percent of discretionary income, and forgiving any remaining debt after 20 years of payments, rather than the current 25 years. Those in public service, including nonprofit and government employees, can get their remaining debt forgiven after 10 years.”
IBR became available in July 2009, and law graduates may utilize it to reduce their monthly loan payments. So it’s fair to say that Obama also meant that no one should go broke because they choose to go to law school.
For more information on IBR, visit Equal Justice Works’ student debt relief resources section and http://ibrinfo.org. Also, consult the links at the bottom of this page that provide important information concerning a basic checklist for loan forgiveness, eligible loans, qualifying employment and qualifying payments.
Assistant Dean for Career Services