President Obama signed into law an improved income-based repayment (IBR) plan for student loans that would lower the IBR cap from 15% of discretionary income to 10% for those students who take out loans after July 1, 2012. Because too few responsible borrowers signed up to the IBR plan, on June 7, 2012, the President signed a Memorandum to help educate students about the IBR program.
There are many borrowers signed up to the IBR plan with loans prior to July 2012 who are aware of the benefits of the IBR program and would like to take advantage of the reduction to 10% of discretionary income; however, they are not eligible. These slightly older borrowers are the prime age for first purchases of cars and homes, currently a widely recognized weak area of the economy.