Yesterday, President Obama directed his Administration to make an additional 5 million existing student loan borrowers eligible for the federal government’s  – Pay As You Earn – income-based repayment program.

This change will allow all who borrowed federal direct loans as students, regardless of when they borrowed, to cap their payments at 10 percent of their monthly incomes. In addition any remaining loan debt would be forgiven after twenty years.  Currently loan forgiveness is only available to borrowers who first took out a loan after September 30, 2007 and continued borrowing after September 30, 2011.  It is worth noting that the change to loan forgiveness eligibility was set to become an option for all new borrowers beginning July 1.

The Department will begin the process to amend its regulations this fall with a goal of making the new plan available to borrowers by December 2015.

Obama also directed the U.S. Department of Education to increase outreach to better publicize the income-based repayment programs through targeted outreach and to study how to more effectively counsel borrowers.  The Administration will also renegotiate its contracts with loan servicing companies to encourage them to do more for struggling borrowers.

The plan to expand income-based repayment plans was critiqued by congressional Republicans, raising concerns about the cost to taxpayers and the administration’s legal authority to make the change without legislation passed by Congress.