The Obama administration on Monday proposed expanding a popular program that caps monthly student loan payments for college graduates with low or moderate incomes, an effort to ease the debt burden for many young adults in a rocky job market. Under the proposal, monthly payments on federal loans would be limited to 10 percent of discretionary income -- above a "basic living allowance" -- for qualified borrowers. That would be lower than the current cap of 15 percent in the income-based repayment program that began last summer. In addition, the administration said, certain borrowers could be eligible for loan forgiveness after 10 years in public service or 20 years in other fields of work. The proposal, part of a package aimed at helping the middle class, would require approval from the Democratic-controlled Congress. The administration estimated the repayment proposal would cost, at most, $400 million to $500 million over five years. A White House fact sheet indicated that the monthly payment for a single borrower earning $30,000 a year who owes $20,000 in loans would be $115 a month under the proposal, compared with $228 a month under a standard 10-year repayment plan. "This will be a great relief to the millions of students suffering increasing debt levels," said Rich Williams of the U.S. Public Interest Research Group, which advocates increased student aid. The income-based repayment program took effect July 1 under a law enacted in 2007.
