Problem borrowers, at a greater risk of default, could exit Federal Family Education Loan Program (FFELP) ABS pools on the expansion of the “Pay As You Earn” plan.

President Obama has proposed expanding the plan to all qualified Federal Direct Loan Program borrowers, starting in 2015. Currently, the income contingent PAYE plan is available to borrowers that obtained their loans were new borrowers as of Oct. 1, 2007 and received a disbursement of a Direct Loan on or after Oct. 1, 2011.

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