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Education Dept. Releases 2 Sets of Rules to Simplify Student Borrowing

The U.S. Department of Education has unveiled two sets of final regulations governing its expanded income-based repayment program and efforts to rein in banks’ deals with colleges.

The revised Pay as You Earn plan, dubbed REPAYE, which is one of the department’s income-based repayment programs, appears similar to the one negotiators settled on earlier this year. The expansion of the plan, which caps monthly payments at 10 percent of borrowers’ discretionary income, comes more than a year after President Obama ordered the department to make it available to borrowers who took out loans before October 2007 or who stopped borrowing by October 2011. The new plan will become available in December.

The final regulations appear similar to rules proposed by the department in May. Among the stipulations: Institutions will be prohibited from requiring students to open a certain account in which student-aid refunds will be deposited; colleges will be required to provide students with a list of options for where to deposit the refunds; and deposits to students’ existing accounts must be made just as quickly as deposits to banks contracting with the college.

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