August 26, 2022

Higher Ed Policy Roundup: Vol. 6 - Issue 20

Policy and Advocacy

 

This Week in Washington

On Wednesday, the Biden-Harris administration announced plans to forgive federal Direct Loans, make changes to income-driven repayment (IDR) plans and extend the pause on student loan payments and interest collection. The student loan forgiveness plan will provide borrowers who earn less than $125,000 a year and households that earn less than $250,000 a year with $20,000 in forgiveness for Pell recipients and $10,000 in forgiveness for all other borrowers.

The administration also plans to create a new IDR plan that will:

  • Cap payments for undergraduate borrowers at five percent of their discretionary income (borrowers with both undergraduate and graduate loans will pay a weighted average rate)
  • Forgive debt after 10 years for those with $12,000 or less in debt
  • Eliminate the accrual and capitalization of any unpaid monthly interest
  • Define discretionary income as 225 percent of the federal poverty level

The Education Department (ED) plans to publish draft regulations for the new IDR plan in the Federal Register and provide the public with a 30-day comment period. Lastly, the administration will extend the pause on payments and interest collection through January 1, 2023.

On Tuesday, ED announced that it has provided over $10 billion in debt relief for 175,000 borrowers through temporary changes to the Public Service Loan Forgiveness (PSLF) program. The Limited PSLF Waiver extended relief to additional student borrowers by relaxing existing program requirements and is available to borrowers until October 31, 2022. Read our statement of support for the PSLF waiver here.

News You Can Use

Read more about the student debt cancellation plan.

These student loans are not eligible for forgiveness.

Will student loan forgiveness make inflation worse?

Recent Legislation

The following bill has been recently introduced for consideration by the 117th Congress (2021-2022):

H.R. 8729 – Debt Cancellation Accountability Act [Rep. Warren Davidson (R-OH-8)] would require ED to obtain a congressional appropriation if it discharges the student loan debt of two or more student borrowers if the total amount is greater than one hundred thousand dollars. This is a companion bill to S. 4483, which was introduced in the Senate last June by Sen.Rick Scott (R-FL).