Education Department releases regulatory plans on income-driven loan repayment, low-value colleges
Jeremy Bauer-Wolf
January 10, 2023
Dive Brief:
-
Monthly student loan repayments would be cut in half for borrowers whose installments are based on their income, under a regulatory plan the U.S. Department of Education unveiled Tuesday.
-
Currently, many borrowers enrolled in an income-driven repayment plan must shell out 10% of what the Education Department considers discretionary income every month. Its newly proposed rule would change that so borrowers would pay only 5% of that income monthly. Further, the draft regulation would broaden the number of single borrowers with lower salaries who wouldn’t have to pay anything — until they earned $30,500 or more a year.
-
The Education Department also said Tuesday it intends to construct and publish a list of “low-financial-value” college programs. The department is asking for feedback in the next 30 days on factors it should use to create the list and said the education secretary later this year will request improvement plans from institutions on it.
Dive Insight:
The proposed reworking of income-driven repayment plans, commonly known as IDR, fits with the Biden administration’s stated mission to overhaul the beleaguered federal student loan system and enact new borrower protections.
Policymakers of all political stripes have called out flaws with federal loan options after the number of students taking out debt soared and many faltered in repaying it. The student loan portfolio has swelled to more than $1.7 trillion, in large part due to rising college costs.
