Ditching Debt

The dreaded student loan often haunts people well into their adult lives. But now thanks to a new program, paying for an education may have just gotten a little more affordable. 

MSNBC reports that starting this week anyone with a student loan can apply for the program, which stems from the Department of Education's 2007 College Cost and Access Act. The new income-based repayment plan will be determined by income and loan size and in its broadest sense will help cap monthly payments and forgive balances remaining after 25 years. A calculator at IBRinfo helps borrowers determine eligibility.

With the seemingly never-ending rise to tuition costs, this new plan could be game changing for recent graduates earning modest salaries or for parents towing the line between college education and retirement plans. The low monthly payments are designed to create manageability and flexibility. However, this isn't the best plan for everyone.

In some cases, accruing interest could push the cost of the loan higher. And since loans are likely to be paid off within 25 years, the loan forgiveness aspect of the program won’t apply to most people. To save on interest costs, those who could afford to would be better served paying off loans faster, said Mark Kantrowitz, publisher of FinAid.org, which tracks the college financial aid industry.