Beginning in the 1990s, government programs were enacted that allow students to repay only what they can afford and have their loans forgiven after a certain period of time. Unfortunately, not many students know such programs exist.
Passed in 2007 as a part of efforts by Congress to rebuild the way the federal college financial aid works, the Income-Based Repayment Program made it so students' monthly repayments could not exceed 15 percent of their income and their loan balances would be cleared after 25 years. For those what worked the in nonprofit sector or held government jobs, this period was decreased to 10 years. Under the Obama Administration, financial aid repayment was altered yet again, holding monthly repayments at a maximum of 10 percent of income and clearing out all students' balances after 20 years. The Obama administration also brought and end to the "private sector loan program" that did not afford students such benefits.
Not everyone is happy about the increased government expenditure on higher education, however. "The potential cost of this program is enormous," said Virginia Foxx, leader of the House Education and the Workforce Committee's higher education subcommittee. She added, "It's unfair to burden hardworking taxpayers, many of whom have not had the opportunity to attend college, with that debt."
Others claim the increased spending can lead to increases in college tuition since there "are no price restraints attached to the federal IBR system."
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