Though the economy has improved markedly since 2008, it is still often difficult for recent college graduates to find work. When these young adults do get hired for their very first full-time jobs, their salaries tend to be lower than average due to the traditional practice of paying individuals with less experience lower wages than individuals with years of employment and expertise under their belts.

As a result of this fairly natural progression, many former students are stunned when their first student loan payments come due a mere six months after graduation. When loan companies push former students to accept a traditional 10-year repayment schedule immediately, many young adults understandably feel the urge to panic.

Currently, some students find that they are eligible for temporary deferments, while others are helped somewhat by debt consolidation. However, many students remain overwhelmed by their student loan payments despite these options. As a result, five major organizations recently released a proposal which could significantly lessen the struggles that former students face in their first several years of employment.

The National Association of Student Financial Aid Administrators and four other organizations have proposed that former students should automatically have their federal student loans enrolled in an income-based repayment plan. Essentially, this proposal would automatically tie an individual’s student loan payment rate to his or her income.

Various income limits and thresholds would impact a student’s loan payments and would result in a certain amount of loan forgiveness over time if an individual’s income does not significantly increase. A version of this kind of repayment plan is currently available for individuals with federal loans but this proposal would better serve a significant number of borrowers and would streamline the process so that former students are given fewer reasons to panic.

Source: Bloomberg Businessweek, “A Proposal to Radically Simplify Student Loan Payments,” Karen Weise, March 24, 2014