February 15, 2023
The American Council on Education led a group of 30 higher education organizations last week in commending regulatory proposals to revamp income-driven repayment plans but urging the Biden administration to work with Congress to review the entire student loan system.
The U.S. Department of Education debuted draft regulations in January that would make large changes to income-driven repayment plans, which allow borrowers to have their loans forgiven after they make a certain number of qualifying payments based on their income. The proposals — which are expected to vastly increase the number of people eligible for the programs and reduce their monthly payments — drew more than 13,000 public comments.
The proposal includes elements that are “important and long overdue,” ACE President Ted Mitchell wrote in a public comment on behalf of the 30 organizations. However, a more effective way to deal with pervasive issues with federal student loans would be a “comprehensive effort to review the entirety of our lending and repayment system,” Mitchell wrote.
The groups signing onto Mitchell’s comments include prominent organizations representing different corners of higher ed, such as the Association of Public and Land-grant Universities, Career Education Colleges and Universities, the Council of Independent Colleges and the State Higher Education Executive Officers Association.
They are calling on the Biden administration to carry out a long overdue rewrite of the Higher Education Act, the federal law governing federal financial aid programs. It hasn’t been updated since 2008 and higher education experts have expressed doubts that a divided Congress can come together to make comprehensive changes to the law.
“In the absence of legislative action, we understand that the Department believes it must use its regulatory powers to help student borrowers repay their loans and to correct the burdensome and needlessly complicated repayment system,” Mitchell wrote in the comment.
The Education Department proposed major policy changes to the income-driven repayment system, including slashing payments from 10% to 5% of borrowers’ discretionary income. It would also raise the income threshold for borrowers who don’t have to make monthly payments, from about $20,400 for individuals to $30,600.