Only 32 student loan borrowers got canceled loans under the IDR

  • Only 32 federal student loan borrowers received forgiveness through income-based repayment, out of $ 4.4 million.
  • The Student Borrower Protection Center called on Biden to implement reforms to the program.
  • He suggested a waiver to allow past payments to count for remission after 20 years.

32 federal student loan borrowers have obtained debt forgiveness. That’s 32 of the 4.4 million who have been paying off their debt for more than 20 years thanks to a program that calculates monthly payments based on income.

Advocates say the income-based rebate program has failed and President Joe Biden has the power to fix it.

Income-Based Repayment Plans (IDR) create a monthly payment plan for student loans based on the borrower’s income and family size. To be eligible for any of the plans, borrowers must submit annual tax documents proving that the payments they would make under the income-based plan are lower than the payments under a standard repayment plan. .

But as Insider reported in March, when the program was designed to write off outstanding borrower debt balances after 20 to 25 years, only 32 borrowers – ever – had their loans canceled. This is why the Student Borrower Protection Center, along with the Center for Responsible Lending and the National Consumer Law Center, have designed recommendations to make sure the program is working as expected.

“Millions of student loan borrowers are straining under the weight of a failing system,” said Persis Yu, policy director and general counsel of the Student Borrower Protection Center, in a statement. declaration. “Income-based repayment failures have kept borrowers in unaffordable debt for decades too long. It is time for the Biden administration do your part and deliver on the IDR promise by giving borrowers the credit they deserve. “

According to data from the Ministry of Education, 4.4 million borrowers have been reimbursed under the IDR for 20 years or more, but the complexities of the program, such as tedious paperwork and deceptive practices of loan companies. loan, have blocked borrowers in repayment, according to the organizations report.

To remedy these failures, they recommend that Biden implement an IDR waiver that would do three things:

  1. Count retroactively every month since borrowers started repayment to remission
  2. Provide relief automatically, so borrower does not have to submit additional documents
  3. Apply the waiver to all borrowers who could have qualified for the IDR but did not consolidate their loans into 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 write off civil servants’ student debt after ten years of payments. eligible, but had a 98% refusal. rate.

Biden vowed during his campaign to fix both the IDR and the PSLF, and in October he announced temporary PSLF reforms – one of which included a waiver that would allow prior payments from any federal program to count for forgiveness. The IDR waiver proposed by the organizations adopts the same model.

Granted, Biden’s administration has already taken steps to make the process easier for borrowers wishing to enroll in 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 the IDR until July 31, rather than submit tax documents.

But after extending the hiatus on student loan payments until May 31, Biden said in a statement that federal borrowers should “do their part” to prepare for the resumption of payments, including looking at options to reduce monthly payments via IDR. As advocates have said, program reforms are needed to make this a viable option.

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