"Ask a group of higher-education policy wonks about the best way to address our nation’s growing student loan problem, and you’re likely to find one solution overlaps party or ideology: Enroll more borrowers in income-driven loan repayment," Mark Huelsman writes in an opinion article for The Washington Post.
IDR, as it’s commonly known, has existed in some form at the federal level since the 1990s and provides a simple but elegant solution for student borrowers who increasingly come out of school with high debts and low incomes. Rather than making lump-sum payments for 10 years, payments rise and fall with a borrower’s annual income, theoretically ensuring that student loans will never take up an unreasonable portion of anyone’s monthly budget. If college does not result in the economic payoff a student or family expects, loans are forgiven after 20 or 25 years.
Since the creation of IDR plans, and because of aggressive pushes by the Obama administration that resulted in the Pay As You Earn and Revised Pay As You Earn plans, most federal borrowers are eligible for monthly payments equaling 10 percent of their income above a poverty threshold.
IDR has long been a bipartisan darling — President George W. Bush signed a 2007 law creating the precursor to today’s plans, and one of the few higher ed-focused proposals pushed by Donald Trump on the campaign trail involved limiting payments to 12.5 percent of income and forgiving loans after 15 years."
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Publication Date: 5/18/2018