Legislation introduced earlier this month by Rep. Drew Ferguson (R-GA) would consolidate income-driven repayment plans for student loan borrowers. The bill—called the Help Students Repay Act and co-sponsored by Reps. Bradley Byrne (R-AL), Thomas Garrett (R-VA), Jason Lewis (R-MN), and Paul Mitchell (R-MI)—would use a borrower's discretionary income to calculate their monthly student loan payment and collapse all existing income-driven repayment plans into one. The bill would also retain a 10-year standard repayment plan.
The new plan would keep the same total loan repayment amount as under the standard plan, and interest would stop accruing after 10 years, but there would be no time-based loan forgiveness. NASFAA is working to clarify exactly how the 10-year interest accrual cap would work.
The two streamlined options would be the only available repayment plans for new borrowers, defined in the bill as borrowers who have no outstanding balance on a federal student loan, including loans made under both the FFEL and Direct Loan Programs.
Our current student loan repayment process is too complex, which only makes it more difficult for borrowers to successfully repay their loans,” said Ferguson in a press release. “We must empower borrowers to make active progress towards repayment. My bill would simplify the repayment process and give borrowers the opportunity to pay down their loans based on their income, reducing their risk of default.
Ferguson’s bill has been referred to the House Education and the Workforce Committee for further consideration. It remains to be seen whether it will move past the committee stage, but the terms proposed in the Help Students Repay Act may be a sign of what’s to come in the upcoming Higher Education Act (HEA) reauthorization bill from the House. Stay tuned to Today’s News in upcoming months for updates on movement in Congress related to the reauthorization of the HEA.
Publication Date: 11/27/2017