Today spelled the start of some much-needed relief for many college students and graduates who up till now have struggled to repay their federal student loans. It marked the start of a new program called "income-based repayment" which ties loan payments to a debtor's income and family size.

The program, partly meant to help those who wind up in relative low paying non-profit or public sector jobs, was featured in a piece by Claudio Sanchez on All Things Considered.

An excerpt from Claudio's report:

CLAUDIO: Twenty-five year old Chanelle Schneider sells lotions, soaps and perfumes at a suburban mall near her home in Gaithersburg, Md.

SCHNEIDER: I work part time, 15 to 20 hours a week.

CLAUDIO: That's about six to seven hundred dollars in take-home pay every month. Her college loan payments, though, are over $800 a month. Schneider's total debt, not counting interest, is $67,000 in private and federal student loans. After six years of college in pursuit of a double major, she's two credits shy of her degree, but can no longer afford college

SCHNEIDER: So i had to leave. And I came out of a high school as a 4.0 student (she laughs). So this wasn't supposed to happen to me y'know. I was supposed to go to college, graduate in four years and get a job.

 

CLAUDIO: In her current job though, Schneider can't possibly make her payments.. This is where the income-based repayment plan kicks in. It'll help her with the $22,000 she owes in federal loans. Because her monthly payments exceed her income, Schneider won't have to pay a dime, zero, until she earns more money, of course.

Once her income begins to climb, the new plan sets a cap on what Schneider's maximum payment will be every month, roughly 15% of her discretionary income. And if she's still making payments 25 years down the road, the government will forgive the balance and interest on her loans

LAUREN ASHER: It provides a light at the end of the tunnel so that your student debt won't follow you to the grave.

CLAUDIO: That's Lauren Asher, president of the Institute for College Access and Success. Her organization and the U.S. Department of Education have each put up a calculator on their websites to help people figure out if the new income-based repayment plan is for them

ASHER: A good rule of thumb if you want to know whether you'd be eligible for income-based repayment is that if you owe at least as much as you earn, you probably qualify.

CLAUDIO: Let's say a student borrowed $30,000 and is now earning $25,000 a year, says Asher. Under the income-based repayment plan his monthly payments would drop from $345 to $110 a month. That's typical for students with mostly federal loans. But the plan doesn't cover private loans.