Congressional Democrats Unveil New Plan to Simplify Student Loan Repayment
Hugh T. Ferguson
April 5, 2022
As policymakers mull another extension to the pause on student loan payments and interest accrual, and many borrowers are already struggling with the currently available repayment options, congressional leaders are now offering more proposals aimed at simplifying the repayment process.
The latest legislation, citing the $1.6 trillion in student loan debt held by borrowers, comes from House Appropriations Chairwoman Rosa DeLauro (D-Conn.), who along with a group of bicameral Democrats seeks to simplify the repayment process by creating only two repayment options for loans entering repayment after July 1, 2022: one fixed, 10-year repayment plan, and one income-based repayment plan.
The first plan would be the same as the current 10-year standard repayment plan, with equal monthly payments that would enable full repayment of the loan and any accrued interest in 10 years.
The second repayment option would be capped at 20 years of payments and would require a borrower to pay 10% of their income above the poverty line each month. Borrowers currently enrolled in an existing income-based repayment plan would have the option to enroll in the new income-based plan as well.
CONTINUE READING
