Only 32 student loan borrowers got loans canceled under IDR
- Only 32 federal student loan borrowers received forgiveness in the form of an income-contingent repayment, out of 4.4 million.
- The Center for Student Borrower Protection has called on Biden to implement reforms to the program.
- He suggested a waiver to allow previous payments to count for remission after 20 years.
32 federal student loan borrowers have had their debt forgiven. It is 32 of the 4.4 million who repay their debt for more than 20 years thanks to a program which calculates the monthly payments according to the income.
Supporters say the income-based reimbursement program has failed and President Joe Biden has the power to fix it.
Income-contingent repayment (IDR) plans create a monthly student loan payment plan based on the borrower’s income and family size. To qualify for one of the plans, borrowers must submit tax documents each year to prove that the payments they would make under the income-based plan are lower than the payments under a repayment plan. standard.
But as Insider reported in March, while the program was designed to cancel borrowers’ remaining debt balances in repayment after 20 to 25 years, only 32 borrowers – ever – had their loans forgiven. That’s why the Student Borrower Protection Center, along with the Center for Responsible Lending and the National Consumer Law Center, have made recommendations to ensure the program works as intended.
“Millions of student borrowers are caving in under the weight of a broken system,” Persis Yu, director of policy and general counsel for the Student Borrower Protection Center, said in a statement. “Means-contingent repayment failures have kept borrowers in unaffordable debt for decades too long. It’s time for the Biden administration do your part and delivering on the IDR promise by giving borrowers the credit they deserve.”
According to Department of Education data, 4.4 million borrowers have been in repayment under the IDR for 20 years or more, but the complexities of the program, such as heavy paperwork and deceptive practices of lending companies, have kept borrowers stuck in repayment, according to the organizations report.
To address these failures, they recommend Biden implement an IDR waiver that would do three things:
- Retroactively count all months since borrowers started repayment toward forgiveness
- Provide relief automatically, so the borrower does not have to submit additional documents
- Apply the waiver to all borrowers who may have qualified for IDR but did not consolidate their loans in the program
The report noted that this waiver request is similar to changes Biden recently made to the Public Service Loan Forgiveness Program (PSLF) last year, which is supposed to forgive public servants’ student debt after ten years of payments. eligible, but recorded a refusal of 98%. rate.
Biden promised during his campaign to fix both the IDR and the PSLF, and in October he announced temporary reforms to the PSLF – one of which included a waiver that would allow previous payments in any federal program to be fixed. count for forgiveness. The IDR waiver proposed by the organizations adopts the same model.
To be sure, the Biden administration has already taken some steps to ease the process for borrowers wishing to enroll in the IDR. As Insider reported last month, Federal Student Aid has revised some documentation requirements, including allowing borrowers to self-report their income to apply for or recertify IDR through July 31, rather than submit tax documents.
But after extending the pause on student loan payments through May 31, Biden said in a statement that federal borrowers should “do their part” to prepare for the resumption of payments, including reviewing options to reduce monthly payments via IDR. As advocacy organizations have said, program reforms are needed for this to be a viable option.