A good news for past, current or future loan takers with a new amendment to renegotiate your monthly student loan repayment bill to a maximum 15% of your discretionary income.

These new benefits will be affected from 1^st of July. This will regulate the student loan payments for millions of Americans. These benefits were signed into law in 2007 as part of College Cost Reduction and Access Act. They include:

• Low interest rates on need-based (subsidized) federal student loans. From 1^st of July the interest rates on subsidized federal student loans will decrease from 6% to 5.6%. That’s 2^nd from four annual cuts in this interest rate and it will continuously decrease down to 3.4% till 2011.

• Affordable monthly college loan payments plan for borrowers. The implementation of this new Income-Based repayment program will be effected from 1^st July, which allows borrowers to pay just 15% of their discretionary income (15% of what a borrower earns above 150% of the poverty level for their family size). The current or future borrower whose loan payment will be greater than 15% of their discretionary income is eligible. After 25 years in the program borrowers debts will be completely forgiven.

• Pell Grant scholarships covering the average tuition at public universities. The maximum Pell Grant scholarship for the 2009/2010 school year will be $5,350 which is $600 more than last year’s award and funding will be provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act. Read the full story

As a result of far-reaching changes in financial aid grant and loan programs low-income students and recent college graduates may reap dramatic gains which will begin form July 1st.

While attention has been received by some of the gains such as a significant hike in Pell Grants. Among all other changes one of the most significant changes is the introduction of income-based repayment. With these incomes based repayments students can considerably reduce their monthly payments which are based on their earnings. This has been done to help particularly the graduates in low-paying public service jobs.

It has been said by Edie Irons who is the spokeswoman for the Project on Student Debt in Berkeley, Calif that it is estimated by them that hundreds of thousands will take advantage of this, but it is not automatic, students shall have to apply to avail this.

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