Sounds good to me—except for one tiny detail; the new repayment plan was not supposed to take effect until 2014. The problem is, however, everyone is drowning in debt right now. So far, over 30,000 people have signed the We The People petition on The While House website asking for help managing student debt.

So President Obama decided 2014 is too long to wait to start administering student debt relief. Bypassing Congress, President Obama today announced that he’s using his executive authority to accelerate the debt relief in the following ways:

Lower Loan Payments

Under the old federal student loan agreement, once a student graduated and started working, he or she was expected to make monthly payments of 15 percent of their discretionary income. After 25 years of making these payments any balance left on the loan would be forgiven.

But now, starting June 2012 (instead of 2014), under the new Health Care and Education Act, these limits will be lowered to 10 percent of a borrower’s monthly discretionary income to be paid back over 20 years. After 20 years the remainder of the debt will be wiped clean.

This may not sound like much, however, it quickly adds up when you consider that there are nearly half a million low-income borrowers out there right now. This small change creates a cost savings of several hundred dollars per month per borrower. That’s a lot of money that will be pumped back into the economy through consumer spending. (And at this point, every little bit helps.)

Special Debt Consolidation Loans

Until last year there were two ways to get a student loan: through the federal government by way of Pell Grants and through private banks via the Federal Family Education Loan program. Under the latter, private lending institutions received funds from the government to provide student loans that were guaranteed by the federal government. In other words the government paid banks (in the form of subsidies) to loan students money, and then paid the bank again if a student defaulted on a loan.

Last year President Obama got rid of the Federal Family Education Loan program (much to the dismay of banks), and instead dumped all that bank subsidy money into the existing Pell Grant Fund. However, by then many graduates were already saddled with both federal student loans and FFEL private bank loans, which meant two monthly payments.

But now starting in January 2012 The U.S. Department of Education will allow people to consolidate their student loans under the Special Debt Consolidation Loans initiative AND get a half-percent cut on the interest rate. It’s estimated that 6 million people could qualify for this consolidation, which again could translate into savings that hopefully will be pumped back into the economy through discretionary spending.

But if this is something you think you might want to do, you have to act fast. The window of time you can consolidate your loans is short; January 2012 through June 2012.

Even though these might seem like small gestures they help graduates burdened with debt get over big hurdles. No one wants to default on a loan, and student debt especially follows you around for life no matter what. If the federal government wants to help you manage your debt, then by all means, take advantage of those opportunities while you can. You never know when they might go away.

Loans can even be forgiven after 10 years for those in the public service. Eligibility for the income-based repayment (IBR) is determined by the size of the loan, and income of the borrower. The plan will become available Wednesday for those that are interested.

This new IBR program comes from the College Cost Reduction and Access Act of 2007. It allows students that have both Federal Education Loan (FFEL) and Direct Loan Borrowers on all Stafford and graduate PLUS loans to apply.

Monthly payments would be less than 10 percent of an individual's income for most of the expected one million people in the program.  Payments would not exceed 15 percent of any income above $16,000 a year. For those who earn less than $16,000 a year, they would not make any monthly payments.

This plan is supposed to help relieve those with average salaries that are struggling to repay student loans. By stretching the repayment over a longer period of time, monthly payments stay at a reasonable proportion of their income.

IBR "can lower costs and provide light at the end of the tunnel" for borrowers. There is greater financial flexibility to buy a home, pay off a car, save for retirement or save for their children's education. However, the accruing interest can increase the loan.

The wise thing to do would be to maintain your payments and pay off the loan as soon as possible.  However, if someone does decide to go on the program and their salary jumps, and they are disqualified as a borrower for the capped monthly payments; then they are still responsible for the cost of the loan and the interest that has accrued to that point.

Granted this is easier said than done, but try to stay out of debt as much as possible. It's better to be poor while you're in college than being poor later on. There are lots of different options out there on how to finance your education, so check all of the different avenues before taking out a loan.

For those with debt this repayment plan can help those that are struggling to make ends meet; but only use the plan if it's absolutely necessary.  The plan almost guarantees that the borrower will end up paying more on the loan the longer it takes to pay off. Getting an education is very important, but be careful with the loans that are used to finance that endeavor.