On Oct. 26, President Obama announced his new “Pay as You Earn” student loan relief plan in an effort to help curb student debt and transform a sluggish economy.

Beginning next year 1.6 million students will be able to cap their student loan payments at 10 percent of their income and the plan will forgive the balance of their loans after 20 years of payments.

“Graduates are entering one of the toughest job markets in recent memory, and we have a way to help them save money…and we can do it at no cost to the taxpayer,” said President Obama.

The president made the formal announcement of the plan at the University of Denver’s downtown campus. “In a global economy, putting a college education within reach for every American has never been more important,” Obama said in the transcript of his speech released on the White House website.

According to the U.S. Department of Education, the plan will reduce monthly payments for more than 1.5 million college students.

In addition to the other changes, starting in January students will also be allowed the opportunity to consolidate their loans to reduce their interest rates.

“I’ve spoken to dozens of recent graduates in my district, and they all say the same thing: there are very few jobs available for them, and the ones that exist aren’t paying well,” said Rep. John Garamendi, D-Walnut Creek, in a press release. Garamendi represents the 10th district, which includes DVC.

Student loan debt is expected to surpass $1 trillion this year, according to Finaid, which is a free service that helps students with financial aid.

Some students at DVC are already wary of taking out loans for school. “I fear them…I don’t want to spend my life paying off something that won’t be beneficial in the end,” said Angie Pierce, 18, undecided.

Obama has been using executive action the past few weeks in an effort to circumvent congress who has stalled on his jobs plan.

Federal legislation was enacted by Congress last year that lowered Income-based repayment loan payment to 10 percent of individual income, and the forgiveness timeline to 20 years. However, that plan won’t go into effect till 2014.

It’s not clear how many people will take advantage of the new plan. Since 2007 only 450,000 college students out of 36 million have taken part in the Federal program that allows them to cap loans at 15 percent.

Current law states that former students are allowed to cap repayments of federal loans at 15 percent of income. In a transcript of a conference call with reporters on Oct. 25, Education Secretary Arne Duncan said, “These changes could make a big difference in the lives of current college students.”

The student loan proposal is part of Obama’s larger “American Jobs Act” that he hopes will strengthen the economy.