President Joe Biden Is Delaying Release Of His Student Loan Repayment Plan
President Joe Biden is still developing a student-loan forgiveness redesign that will bring relief to millions of borrowers. Still, he is delaying a plan to lower borrowers’ monthly bills.
Business Insider reports that income-driven repayment (IDR) plans were created to give borrowers affordable monthly payments based on a person’s income, with the promise of loan forgiveness after 20 or 25 years, depending on the plan a student is on.
However, in recent years, these plans have been criticized due to complicated paperwork requirements that shut out most borrowers eligible for the plan. Additionally, an NPR investigation revealed several loan companies do not track borrowers’ payments, pushing them off the loan forgiveness track and creating significant administrative burdens.
To make things easier for borrowers, the Education Department is creating a new repayment plan to improve the experience for borrowers, initially set to be released this month. But a department spokesperson told Business Insider the plan is being delayed to ensure measures like expanding Pell Grant access to incarcerated students are finalized.
Instead, the IDR proposal will be introduced in a separate package the department believes can still be implemented next summer, along with other proposals. The number of skeptics is growing, however.
Persis Yu, a policy director and counsel at the Student Borrower Protection Center, told Business Insider, “distressed federal student loan borrowers are left waiting for President Biden to make good on his promise of delivering relief.”
“Failing to deliver a finalized IDR rule by November 1 means that borrowers will either need to wait another year for the promise of a truly affordable repayment option or imperil their financial wellbeing as the Department and its servicers — with their history of incompetence and abuse — rush to implement yet another repayment plan,” Yu said.
In April, the Government Accountability Office said more than 7,700 borrowers were “potentially eligible” for loan forgiveness but have continued to make payments due to tracking errors. In response, the department adjusted IDR plans, including a one-time revision of any past payments disqualified toward forgiveness progress, bringing more than 3 million borrowers closer to relief.
Student loan payments are set to resume next month, and Biden has yet to indicate whether he will continue payments. If he does, it may mean another bill for Americans already struggling financially due to inflation, higher rents, and issues related to the COVID-19 pandemic.