President Obama's "Pay As You Earn" plan to assist students and graduates is actually a modification of an earlier bill passed by Congress to improve the student loans consolidation process. The President's Pay As You Earn plan would cap the repayments on student loans at 10 percent of the borrower's discretionary income, instead of the 15 percent cap in the bill passed by Congress. Additionally any remaining loan balance would be forgiven after 20 years of loan repayments, instead of the 25 years in the current bill. The Pay As You Earn proposal would change the student loans consolidation process to allow direct student loans from the Department of Education and student loans from the Federal Family Education Loan Program to be consolidated into a single loan. This student loans consolidation arrangement would result in a consolidated loan with an interest rate savings of up to one-half of percentage point. This student loans consolidation proposal could affect more that 5.5 million current student loan borrowers. The President's Pay As You Earn proposal would go into effect in 2012, instead of 2014 with the current bill passed by Congress. The President plans on making the modifications to the Congressional bill using executive authority, requiring no additional action by Congress.