According to the Project on Student Debt, 67% of students graduating from four-year colleges and universities had student loan debt in 2008. That's up 27% from 2004.  The average debt levels for graduating seniors with student loans was $23,200.

This can be a crippling level of debt for young workers trying to get a foothold in an economy that is slowly moving towards a jobless recovery.  Couple that with credit card debt (a topic for another time) and the need to pay for rent, transportation, Internet access and food and it's easy to see why student loan bills seem to never get repaid.

Some relief has arrived in the form of the new Income Based Repayment Plan.

Enacted as part of the College Cost Reduction and Access Act of 2007 and put into place on July 1, 2009 it provides for lower payments and forgiveness of loan balances after 25 years of payment. 

By capping student loan payments at a percentage of the borrower's discretionary income (based on borrower's income and family size) it helps recent graduates get established without an unbearable debt load.  The monthly payment amount is adjusted annually, based on changes in annual income and family size.

This program is intended for those who are experiencing financial difficulty, have low income compared with their debt, or who are pursuing a career in public service.  (Those noble individuals can have their loan balances expunged after 10 years.)

Note that this program is only available for federal student loans and not private loans.  To learn more about the IBR visit IBRinfo.

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