The student loan industry is being sent to reform school by the federal government. Here's what you need to know if you're struggling with student loan debt.

Under the Pay As You Earn repayment program, your monthly payments on federal loans will be capped at a 10% of your income. In addition, your outstanding debt is forgiven after 20 years of on-time payments. This new provision applies to federal student loans taken out after October 2007; it does not apply to any private loans.

To see if you're eligible for Pay As You Earn, visit the Education Department's website at StudentLoans.gov.

For federal student loans taken out before October 2007, your payments are capped at 15% of your income and must be paid on time for 25 years to be forgiven. This is part of the income-based repayment program. Visit IBRInfo.org for more info.

Additional Options for Student Loan Forgiveness

There are new student loan forgiveness laws that actually benefit a wide range of workers. Public service employees can qualify for full loan forgiveness after making 10 years of monthly payments on their federal student loans.

By contrast, private sector employees must make 20-25 years of monthly payments on their federal student loans to have their remaining balance wiped away.

Below is a list of the public service fields that will qualify for loan forgiveness. Ask your loan servicer for complete details about how to take advantage of this generous program:

• Government, military service, emergency management, public safety, law enforcement, public health, public education. (In addition, military personnel on active duty will be able to defer payments on their loans, and service members who are returning to civilian life will be able to defer payments for more than a year.)
• Social work in a public child- or family-service agency; public interest law services, including prosecution or public defense or legal advocacy in low-income communities for a nonprofit organization; public child care; public service for individuals with disabilities; public service for the elderly.
• Public library sciences, school-based library sciences and other school-based services.
• Certain employees at nonprofit groups, as defined by the tax code, and full-time faculty members at tribal colleges or universities.
  

In addition, this comprehensive list compiles some of the most popular loan forgiveness opportunities. A state-by-state list of loan forgiveness programs has also been compiled by the American Federation of Teachers.