Income Driven Repayment Plan Proposed Regulations
The U.S. Department of Education has released proposed regulations to overhaul student loan repayment plans by creating a more affordable Income Driven Repayment (IDR) plan for borrowers.
Meaningful student loan debt relief must be provided to struggling borrowers to start addressing inequities that have disproportionately saddled borrowers of color with higher amounts of student debt, leading to hardships that stymie repayment of those loans and in turn greater rates of default. For current and future borrowers, relief includes improving income driven repayment plans so they offer a more affordable option for paying off balances and alleviating the economic burdens disproportionately facing communities of color.
Some of the key proposals include:
Capping payments for undergraduate loans under IDR plans at 5% of the borrower's discretionary pay, half the rate of the current 10% cap.
Requiring payments only for those who earn more than 225 percent of the poverty line vs. 150 percent of the poverty line.
Stopping unpaid interest accumulation if monthly payments are made. This change will prevent borrower loan interest from ballooning, which under prior repayment plans led, in some cases, to an increase in the amount owed by the borrower to more than the original loan.
Automatically enrolling borrowers into an IDR plan when they are 75 days behind on payment.
You can read EdLoC’s comments on the proposed regulations HERE.
If you are interested in learning more about EdLoC’s policy work, please contact Angelica Solis-Montero, Chief Policy Officer at asolismontero@edloc.org.
