It's not a great time to be graduating from college, particularly if you're one of millions who are saddled with student loan debt. In an economy that is still shedding jobs at faster rates than economists predicted, prospects are dimmer for this class of graduates than perhaps any class in recent memory.

All of which makes the federal government's new income-based college loan forgiveness plan, slated to begin today, so much more timely. The plan ties monthly payments to graduates' income levels, offering a measure of predictability and proportionality to the school loan industry that has been sorely lacking.

Interested graduates should visit the government's loan repayment website to see if they are qualified. By clicking on the handy calculator tool and entering basic information about their loan burden, income level, and family size, a graduate can see how much they'd be required to pay each month.

What does it look like in practice? Imagine a student who graduates with $100,000 in debt and takes a job as a teacher earning $40,000 a year and who lives by herself. With the income-based repayment plan, the student would owe only $295 / month--a number that is calculated by taking 15% of the difference between 150% of the federal poverty figure and the graduate's annual salary.

Seems sensible right? It ties the interests of the borrower with the interest of the lender (in this case, the federal government only--the loan program is only open to students whose debt is owed directly to the fed) because lenders have no interest in demanding such exorbitant monthly payments that their borrowers default. But here's the best part of the deal: after twenty-five years of payments, if the borrowing graduate still has any debt remaining, the remainder of their debt is completely forgiven.

That's right. The government will let you walk away from whatever else you owe if you've made payments reliably. And the deal is even sweeter if you're a student working in a public interest job like teaching: the government will forgive your loans after only 10 years.

Why is the government going bucky willy to help college grads all of a sudden? Part of it can be chalked up to good intentions and the sound logic of a long-term investment in a skilled workforce, the American dream and so on. Part of it also owes to the government and the Obama administration's self interest in meeting a particular political goal: slowly but surely moving the federal education loan system off of the private-bank oriented subsidized loan system and towards the more efficient direct loan program. The loan forgiveness and income-based repayment plans accomplish both goals: they help people pay for school while giving them an incentive to elect into the direct loan program on their own volition. For more info on the direct loan versus subsidized loan controversy, check out this previous entry.