The recent financial news has shown that the number of student taking financial aids both from government and private organizations to carry out their education is increasing. The financial experts regard this phenomenon as a direct effect of the ongoing economic turmoil. Where the unemployment rate of the country is increasing severely these days, people are being forced to take additional financial helps to carry out the fundamental needs. No doubt that the cost of education has also rise. To help the students in this time, the federal government has come forward with some suitable loans and loan repayment plans. As students who take up the loans often fall in financial problem for a high repayment amount to be paid every month for the loans they have taken. That is why; there are several edible student loan repayment plans that are going to suit the economic situation of the students. One of them is "pay as you earn" repayment plan.

The rules of pay as you earn repayment plans:

If a student chooses to take pay as you earn repayment plan, then the plan will capture 10% of his or her monthly income in order to repay the loans. There are also other student repayment plans that have allowed the students to pay according to their income. The difference with those income based repayment plans with such income based repayment plan is that it will be available to only those students who have applied for the student loans on or after 1st October of the year of 2007. People who have also received the disbursement of student loans on 1st October or after that time will also be eligible to get this repayment plan.

One of the best benefit of the pay as you earn repayment plan is that a student will be able to get a loan forgiveness after some time as a obtainer of this repayment plan. The key feature of such repayment plan is that it erases the remaining principle balance of the loans after a student repays the loans for some years, consecutively and regularly. There are also other loan repayment programs that hold such forgiveness, but this repayment plan seems to be one of the most generous plans, as it forgives the remaining balance of the student loans after 20 years.

Also this new income based repayment plans, encourage the students to take up a public service job. How is it? Let's take a concentrated look on the plan again. The loan amount that is forgiven after 20 years under this loan repayment plan will be assessed as an income. Now, the students will have to pay an amount of tax for this income. Only if the students join a public service job then such income will not come under tax payable incomes. As the government is aiding the students with reasonable loan repayment program for the students, they are also looking up for making eligible human force for public services in order to solve the unemployment problems and to have a smooth economy.