Note: While this series focuses on law students and legal education, the changes outlined apply to all graduate and professional programs and degrees. There is a slight modification for certain medical-related programs, but that is beyond the scope of these discussions.
One of the great and needed benefits of borrowing under the federal loan programs is that you have myriad options to repay those loans. Several of these options were designed to ensure that student loan repayment is manageable and student loan debt does not become a financial burden for the rest of your life.
Income-driven repayment (IDR) plans allow a student borrower to make a student loan payment based on a percentage of the borrower’s discretionary income; the remaining balance of student loans will be forgiven after a certain number of years in repayment. This helps borrowers manage their payments as they deal with other life responsibilities and ensures that graduates can work in varied fields while still affording to pay back their student loans.
The most recent incarnation of IDR is the REPAYE program. Under this plan, you pay 10% of your discretionary income (a calculation based on your tax-based Adjusted Gross Income), and as a law student, you would have your loans forgiven after 25 years. If you were to fall on hard times or get into a career that does not pay a high salary, you could end up with a monthly payment of $0 per month.
The House committee-passed PROSPER Act seeks to upend this student-friendly framework.
Under the PROSPER Act, there would only be one IDR plan, and it is less favorable by every measure. First, you would have to pay 15% of discretionary income every month (compared to 10%). Second, there would be no time-based forgiveness of your loans. You pay until you have paid back your principal plus some calculated interest. And finally, you would have to pay at least $25 per month (compared to $0), regardless of your circumstances.
While consolidating the federal repayment plans could go a long way in simplifying students’ options and reducing confusion, the new IDR plan under PROSPER would make students pay more for longer. This makes paying for your law degree more complex and more expensive.
But you can do something about it:
The U.S. Senate is currently engaged in a debate about changes to higher education law. You can have a major influence over how changes to higher education will work in the future.
Call your members of Congress to let them know how these changes proposed in the PROSPER Act would negatively impact you and other law students. Let them know that you expect policies that protect borrowers and make education less burdensome and less expensive!
We have resources to help you contact your Senators and Representatives. Check out the student version page of our #MakeTheCase Advocacy campaign.