This year, total student loan debt in the United States finally exceeded $1 trillion. This surpasses even credit card debt, which is seen as one of the most negative forms of debt in America. It is estimated that the average student in America has $25,250 in student loan debt by the time he has finished his undergraduate education. By comparison, the average student loan debt in 2000 was $15,100. In 1990, it was as low as $8,200.
Repayment is not a lost cause, though. This October, the White House announced changes to student loan repayment laws. The Pay As You Earn proposal, as it’s called, strives to put a cap on loan repayments based on your income. Maximum student loan repayments cannot exceed 10 percent of one’s discretionary income under this proposal, and any leftover student loan debt is forgiven after 20 years.
There are restrictions to this, certainly. Private loans are not accounted for in this, nor are loans for current students graduating before 2014. PLUS loans, which parents and guardians take out on behalf of their college-aged children, are also not subject to the Pay As You Earn proposal. It is also something which one needs to apply for and present proof of income (in the form of tax documentation, etc.) every year to maintain.