**10/28/2011 6:42pm : I just came across this Huffington Post article, which basically expresses the same concerns I have regarding the Pay as You Earn Proposal. Those interviewed in the article reinforce what I had suspected: the proposal will help those who enroll in college beginning in 2014, but it does nothing for those who are already struggling to keep up with their student loan payments.  I’m still waiting to hear back from Sallie Mae re: Income-Based Repayment.

I woke up this morning to an email from The White House. No, I’m not some powerful insider. Rather, I had taken part in the “We the People” petition process, and signed a petition asking the Obama Administration to forgive student loan debt. According to the email, the administration was “excited to announce a new policy that speaks to the concerns expressed in this petition.”

At first glance, I was excited too. This new “Pay as You Earn” proposal will allow some borrowers to greatly reduce their monthly student loan payments, as it limits loan payments to 10% of the borrower’s discretionary income.In addition, all remaining debt will be forgiven after 20 years.  A glimmer of hope.

Then, I read on and came across this paragraph:

Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option.  Students can find out if they are currently eligible for IBR at www.studentaid.ed.gov/ibr. 

Again, I had some momentary jubilation. Another glimmer of hope. There might just be an option that will help me make my loan payments more managable! Something that might allow me to repay the $60k I owe in student loans, without forcing me to choose between my loan payment, rent, and groceries. I clicked the link to the IBR site. I filled out the IBR calculator. After completing all of the steps, I received a lovely message that told me I might qualify for the program, which would reduce my monthly loan payment to approximately $110/month (about a third of what it currently is). The message advised me that this was just an estimate, and that if I wanted to apply for Income-Based Repayment, I should contact the servicer of my loan.

Now, I hate using the phone. Blame it on 4 years of working in a call center, but I avoid picking up the receiver at all costs. If I absolutely have to use the phone, I make sure that I have a purpose, and that I’m prepared with all necessary information. Before placing a call to my servicer, I decided to look a bit further into the terms of qualification for IBR and the recently-announced proposal reforming the plan. Here’s what I found:

• The newly announced “Pay as You Earn” proposal is set to go into effect for all new borrowers after 2014—mostly impacting future college students. Those of us who are currently struggling to balance our student loan debt with our living expenses don’t qualify.
• According to the Federal Student Aid website, “All Stafford, PLUS and Consolidation Loans made under either the Direct Loan or FFEL Program are eligible for repayment under IBR, EXCEPT loans that are currently in default, parent PLUS Loans (PLUS Loans that were made to parent borrowers), or Consolidation Loans that repaid parent PLUS Loans. The loans can be new or old, and for any type of education (undergraduate, graduate, professional, job training).” Alright. This is where things get confusing. From what I’ve been able to determine, “direct loans” either means
• Stafford loans
• Grad PLUS loans
• Most federal consolidation loans
• OR it means:
• Only loans that were dispensed by the US Dept. of Education (those dispensed through banks or other private lenders are ineligible.)

The problem with this is that I can’t tell which is correct. I can’t seem to find any clarification. Do I qualify, or not?

Needless to say, I’m frustrated, and disappointed. I’m starting to get a little bit angry…and when I get angry, I argue. I am an experienced arguer. I’ve often been told that I should have gone to law school because of my ability to dig in and manipulate an argument in my favor. Of course, I don’t have a human being standing here to argue with. But I do have a statement: the White House press release. Let’s take another look at the text I quoted earlier, this time with some emphasis on my part:
Current law allows borrowers to limit their loan payments to 15 percent of their discretionary income and forgives all remaining debt after 25 years. However, few students know about this option.  Students can find out if they are currently eligible for IBR at www.studentaid.ed.gov/ibr. 

So. The government has a plan in place to help borrowers manage their student loan debt. And the government is trying to express its concern with helping borrowers overcome their student loan debt by pointing out that it has this program which very few people know about. What? This reminds me of when someone omits an important fact, and then when you act outraged at the omission, they turn the blame around on you for not asking about what you didn’t know in the first place.

I honestly hadn’t heard of Income-Based Repayment until I got the e-mail in my inbox this morning. It’s been seven years since I graduated college; five years since I got my master’s degree. I’m the rare person who actually read through my master promissary notes before I signed them. When I go to my loan servicer’s site and click on the links to manage my loans and reduce my payments, I’m given the same options for deferment and forbearance that I’ve seen (and used) a million times. I’ve never seen anything about Income-Based Repayment. Perhaps this is my fault for not knowing where to look. I’ve got to wonder, though, shouldn’t the lenders and servicers be responsible for making this information readily available to their customers?

In 2009, the federal Department of Education took over federal student loans, ending the participation of private lenders in the program. In essense, this means that the US government is now solely in charge of federal student loans. The US government also manages IBR. If few students know about this option, I have to ask, who’s fault is it?

After some digging, I did manage to find some information on my servicer’s site regarding IBR. I have no idea whether my loans are actually eligible or not (One was originally taken out from Fleet, and then turned over to Bank of America. The second originated with Bank of America. The two have now been consolidated with Sallie Mae). I’ve submitted all of the necessary information, so I guess we’ll see.

I’m really glad that the Obama administration seems to be listening to the American public in some regard. I’m glad that some steps are being taken to alleviate some of the crippling student loan debt our nation is experiencing. I can’t help but think, however, that this isn’t enough. The petition I signed wasn’t asking for the government to lower payments over time. If the IBR program is solely for loans through the Dept. of Education, many of us who are currently struggling will continue to do so, as our loans were issued by the banks. I’m hoping that this legislation isn’t a last minute ploy to gain votes for re-election (though I think I know better). I’m hoping this is just the first step, because we’ve still got so far to go.

***10/26/2011 9:04PM: I just received this video in an email from BarackObama.com. The video helps to simplify and clarify the Pay as You Earn proposal somewhat…but is it enough? What do you think?