Biden Administration Will Review Income Based Repayment, Student Loan Forgiveness Programs


The Biden administration this week announced that it will begin the process of reviewing and overhauling regulations governing major federal student loan relief programs, including student loan forgiveness programs and income based repayment plans.

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The announcement pertains to a regulatory rewrite process, which involves the Department of Education reviewing and possibly dramatically changing complex federal regulations that govern key federal student loan programs. A wide array of programs will be subject to review, including the following:

  • Borrower Defense to Repayment, which allows student loan borrowers who were defrauded by their schools to get their federal student loan debt cancelled. Regulations governing the program were initially established under the Obama administration. The Trump administration, via former Education Secretary Betsy DeVos, then significantly updated and amended the regulations to make it more difficult for borrowers to obtain relief. Those regulations still largely remain in effect.
  • Total and Permanent Disability Discharges, which allow borrowers who are unable to maintain substantial, gainful employment due to a medical condition to get their federal student loans cancelled. President Biden recently made changes to the program via executive order by temporarily exempting borrowers from administrative requirements during a three-year monitoring period following a discharge approval.
  • Income-based repayment plans, popular programs which allow federal student loan borrowers to repay their loans using a formula tied to their income and eventually get their balance forgiven if it is not paid in full. There are currently multiple income-driven repayment plans, each with its own complex eligibility criteria and payment formulas.
  • Public Service Loan Forgiveness (PSLF), which forgives the federal student loan debt of borrowers who work for at least 10 years in qualifying public service employment. The PSLF program has been plagued by complicated eligibility criteria and ongoing administrative problems that have resulted in a dismal approval rate.

The regulatory process can result in major changes to federal student loan programs, and does not involve Congress, which can ease the path to significant reforms. The creation of a formal Borrower Defense to Repayment application and review system was done through the regulatory process. Two newer, widely-used income-driven repayment plans — Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) — were established through regulations.

During last year’s presidential campaign, Biden had proposed revamping several federal student loan programs, and this could be the first step in achieving those goals. He had criticized the current complicated system of overlapping income-driven repayment plans, and had called for a new income-driven plan that would effectively replace the existing plans. This new plan would require borrowers to only pay 5% of their discretionary income towards their student loans, rather than the 10-20% currently required under existing programs — thus cutting borrowers’ payments by half or more. Biden had also called for an overhaul of the Public Service Loan Forgiveness program to allow for all federal student loans and all repayment plans qualify. He also suggested partial loan forgiveness for every year of public service over the course of the 10-year PSLF program, rather than making borrowers wait until the end of their 10 years of service period to get any relief.

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