But does the 10 percent cap make that much of a difference? It looks like PAYE saves money only for those low-income borrowers who have incurred an unusually large federal debt — so much debt that the federal government agrees to forgive whatever you haven’t paid off after 20 years. That certainly helps, but it isn’t going to help a majority of college graduates.

The federal government uses loan forgiveness as an incentive to encourage recent college graduates to pursue full-time government or nonprofit work. The Public Service Loan Forgiveness program will forgive the debt of students entering broadly-defined “public service” after only 10 years, mitigating the burden of debt for graduates pursuing fields not known for being lucrative.

Attention is often focused on extreme cases of students who borrowed hundreds of thousands of dollars. But only 3.7 percent of borrowers — including graduate students and parents who borrow to pay for their child’s education — actually take on debt in six figures.

But let’s look at the hypothetical case of a graphic designer: A single college graduate earning $46,900 a year through full-time work who will have an annual income increase of 5 percent. She has borrowed $100,000 and is charged 6.8 percent interest. According to the federal Repayment Estimator calculator, if the graphic designer meets her payments each month for 20 years (at 10 percent of her discretionary income plus interest, her payments would start at $245 in her first month of repayment and reach $717 by her last), the federal government will forgive nearly $130,000 of her remaining debt plus interest accrued over time. In total, she will pay $106,581.

But there’s a catch. The relief of PAYE’s debt forgiveness can come with an onerous tax liability. It appears our graphic designer saves $129,419 thanks to the 20-year forgiveness stipulation, but because her chosen profession does not qualify for the Public Service Loan Forgiveness program, her “forgiven” debt could qualify as taxable income. In short, the designer’s annual income taxes could nearly double in the final year.