President Obama announced on Oct. 18 at the University of Colorado in Denver that college graduates will have an easier way to pay off student loans through the new “Pay as You Earn” plan.

The Pay as You Earn Plan, which was supposed to go into effect in 2014, will now go into effect in 2012 due to congress’s push by Obama. The plan will allow college graduates’ loans to not exceed 10 percent of the graduate’s discretionary income. After 20 years, any remaining debt will be forgiven, said Georgia Southern University’s Director of Financial Aid Division of Student Affairs Connie Murphey

“Last year graduates (that) took out loans left college owing an average of $24,000. Student loan debt has now surpassed credit card dept for the first time ever” said Obama in his speech addressing college students in Denver.

The old policy was that graduates had up to 10 years after they graduate, or leave school, to repay their student loans. College graduates also had to make payments of 15 percent, said Murphey.

The smaller payments will mean the payment time lasts longer, said GSU economics professor Anthony Barilla, Ph.D in economics.

“To the actual college graduate, if you kept their payments at 10 percent, that means they get to make smaller payments of their student loans and that also goes on for a longer duration, so there’s a plus and a minus to it,” said Barilla. “To the college graduate itself, it’s a longer duration of having to pay that loan.”

The college graduates that will not be affected are the students who received loans through private lenders such as banks and individuals, said Murphey.

“The ones that will not be affected is if students have a private loan through a lender, and a lot of students do. They go directly to a lender, they borrow money, it never comes through the school, it’s called a private loan,” said Murphey.

Wells Fargo Regional Bank commented on the new policy.

“We are evaluating what these proposed changes around the annual payment cap and loan forgiveness mean for the industry, our customers and our business. The new programs announced this week are directed at FFEL and DL loans only, not private student loans,” said Jamie Dexter, corporate communications at Wells Fargo.

“When it comes to financing education, we encourage consumers to be sure to look at all of their options including grants, scholarships and loans from all sources and make careful comparisons among all of their choices,” said Dexter.

Barilla gave his advice for college students and their finances.

Barilla said, “My advice to college students is to pay off your student loans as fast as you can, but that’s easier said than done.”