AG CAMPBELL CO-LEADS COALITION IN SUPPORT OF FEDERAL PROPOSAL TO
CREATE A MORE AFFORDABLE REPAYMENT PLAN FOR STUDENT LOAN BORROWERS
AG Commends Proposed ‘Meaningful Improvements’ to Income-Driven
Repayment; Calls for Additional Relief, including for Parent Borrowers
BOSTON – Today, Attorney
General Andrea Joy Campbell co-led, alongside Attorney General Rob Bonta of
California, a coalition of 22 state attorneys general in submitting comments to
the U.S. Department of Education in response to proposed changes to the
Income-Driven Repayment (IDR) program. The coalition commends the Department’s
proposal to create the most affordable income-driven repayment plan ever made
available to federal student loan borrowers and called on the Department to
make additional changes that would provide critical assistance to struggling
borrowers.
IDR plans enable
borrowers to make payments based on income and family size and offer the
possibility of loan forgiveness after 20 or 25 years of qualifying
payments.
“No one should have to
choose between paying student loan bills or paying for basic human
necessities,” said AG Campbell. “My colleagues and I commend the
U.S. Department of Education for proposing reforms that will make a significant
difference in the lives of borrowers, while also recognizing more should be
done to ensure every borrower has an affordable path out of student loan debt.”
In their letter to Secretary Miguel Cardona the
attorneys general applaud the Department for proposing “meaningful
improvements” to IDR and emphasize that the proposed regulatory reforms will
make monthly IDR payments more affordable, eliminate enrollment disincentives,
help borrowers avoid ballooning loan balances, and prevent needless defaults.
In addition to these
significant improvements, the letter also calls on the Department to expand
relief to parent borrowers and defaulted borrowers and to adopt additional
measures to remedy past harms and ensure the program’s success moving forward.
As the coalition
explains in the letter, IDR plans, which first became available in the 1990s,
were intended to ensure that borrowers’ monthly payments would be affordable
and that borrowers would not be saddled for life with student loan debt.
However, existing IDR plans have failed to meet these goals due to faulty
servicing, needless administrative complexity, and design flaws.
The coalition applauds
the U.S. Department of Education’s proposal to address past problems by
creating a vastly more affordable IDR plan. In particular, the letter commends
the Department’s plan to protect more borrower income from repayment,
enroll delinquent borrowers automatically in IDR and count certain periods of
forbearance towards loan forgiveness. Additionally, the coalition commends the
Department for eliminating the harmful practice of unpaid interest accrual,
which causes those borrowers in greatest need of assistance to face rapidly
growing loan balances while in IDR. These proposed changes will help prevent
needless defaults, get rid of deterrents to IDR enrollment and stop borrowers
from needing to choose between buying basic necessities and paying their
student loan bills.
In their letter, the coalition also calls upon the Department to adopt
additional measures to ensure that IDR will benefit more borrowers, including:
·
Making consolidated
Parent PLUS loans eligible for the most affordable repayment plan—Revised Pay
As You Earn (REPAYE);
·
Creating a simpler
path for borrowers in default to enroll in IDR;
·
Counting all past
forbearance and repayment periods and certain deferment periods toward IDR loan
forgiveness; and
·
Expanding the reach of
the Department’s proposals to provide retroactive relief to borrowers who have
suffered from the historic mismanagement of the federal loan repayment system.
In
addition to the newly proposed IDR plan, the U.S. Department of Education has
announced other debt relief initiatives to address the past problems with IDR,
including the One-Time IDR Adjustment.
Through the One-Time IDR Adjustment, borrowers whose loans are owned by the
U.S. Department of Education can receive credit toward IDR loan forgiveness for
past repayment periods and certain deferment and forbearance periods—even if
they have never previously enrolled in IDR, potentially enabling them to
receive forgiveness much sooner. Federal loans that are privately-owned must
be consolidated into the Direct Loan
Program by May 1, 2023 to benefit from the One-Time IDR
Adjustment. To learn how to find out if federal loans are privately or
federally owned, please visit www.mass.gov/ago/WhoOwnsMyLoans.
For more information
on federal loan debt relief opportunities, borrowers can visit the Massachusetts AG’s website at www.mass.gov/ago/studentloans. Massachusetts residents who are seeking
student loan help or information can also file a Student Loan Help Request or call the AG’s Student Loan Assistance
Helpline at 1-888-830-6277.
A full copy of the letter can be found here.
Joining AG Campbell and AG Bonta in issuing this letter, are the attorneys
general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia,
Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New York, New
Mexico, Oregon, Pennsylvania, Rhode Island, South Dakota, Washington,
Wisconsin, and Vermont.
This matter was handled by Managing Attorney Yael Shavit, of the AG’s Consumer
Protection Division and Student Loan Ombudsman Arwen Thoman, of the AG’s
Insurance & Financial Services Division.