WASHINGTON ( CNN ) -- Colleges are n't getting any cheaper , but federal student loans are . Students who graduate with college loan debt can use a repayment plan that will give lower monthly payments . Millions of borrowers will get a better deal on their student loans based on federal rules that went into effect Wednesday . Lower interest rates and loan forgiveness in some cases are some of the rules that will make borrowing cheaper for many students . Also among the rules : an income-based repayment program that considers income and family size . The program allows borrowers to set their monthly loan payment at 15 percent of their annual adjusted gross income . Under the traditional 10-year plan , a borrower who graduated with $ 25,000 in student loan debt and whose income is $ 30,000 a year would pay $ 288 a month at an interest rate of 6.8 percent , according to the the Department of Education 's Web site . Now , the student could opt for payments of $ 172 a month spread over a longer time . Borrowers can apply the plan to their remaining loan amount as of Wednesday . Single borrowers who earn less than $ 16,245 -- the poverty level -- would not be required to make any payments on their federal loans as long as their income remained that low . Payments would be significantly lower under the income-based plan , but loans would take longer than the standard 10 years to repay . That could increase overall interest costs for borrowers . Proponents argue that for some it is well worth the tradeoff by making lower-paying jobs more appealing . `` Just imagine all those people that went to college and had expectations of a good job market and now it 's not so hot , '' said Deputy Undersecretary Bob Shireman of the U.S. Department of Education . `` This provides a kind of safety net , helps give them some assurance that they 'll be OK , and that they 'll even be OK if they go into lower paying jobs . '' For students who eyed public service as a career but thought the salary underwhelming , a loan forgiveness option for public sector workers might inspire some . Borrowers who work for 10 years in a public service job , such as public school education or the military , will have the remainder of their federal loans forgiven after that decade ends . Graduates must pay monthly loan bills during those 10 years and can use the income-based plan to lock in lower payments . The government counts work from October 2 , 2007 onward , Shireman said . Thus , the earliest a borrower can have loans forgiven is October 2 , 2017 . Also providing relief to borrowers are a lowered interest rate , increase in Pell Grants for current students and a reduced loan origination fee . The government cut the interest rate from 6 percent to 5.6 percent . Payouts of Pell Grants , which allow students to borrow less , increased by $ 619 to $ 5,350 for the 2009-2010 school year . Loan origination fees decreased from 2 percent to 1.5 percent and will fall to 1 percent next July , Shireman said . Congressional Democrats pushed the income-based plan , public service program and decrease in loan interest rates , all signed into law by former President George W. Bush under the College Cost Reduction and Access Act . President Obama 's stimulus bill supported the increase in Pell Grants . Last year , the government gave out about $ 80 billion in student loans to more than 7 million students . CNN 's Khadijah Rentas and Lisa Desjardins contributed to this report .
Changes include lower interest rates , income-based repayment program . Borrowers who take public sector jobs can have part of loan forgiven . Bush administration law includes Pell Grant increases from Obama .