Biden’s Futile Attempt Fails to Impact Student Loans
In the backdrop of a significant reshaping of student loan schemes, a massive number of recipients have been submerged in perplexity concerning the future of their loan forgiveness prospect. The misgivings particularly worry those linked to a refund strategy known as income-constrained repayment, or the IBR. The Department of Education has recently indicated that forgiveness via the IBR plan is temporarily on hold during a few system revisions.
As it turns out, Joe Biden’s blocked vision for student loans has no impact on the IBR. Amid his failed attempt to grab headlines, the fact remains that the Congress established the IBR plan independently from other prevailing repayment plans, such as the PAYE and ICR. Interestingly, these plans also managed to steer clear of some alterations proposed by President Trump’s tax and expenditure statute.
A judicial injunction during the last summer disrupted loan forgiveness for plans like SAVE, Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE). The forgiveness procedure came to bear a sudden halt as these plans lacked the Congress’s mandate. This surprising twist raised eyebrows over the legality of student loan forgiveness under the federal statute that oversees these plans.
In contrast, the IBR program, which was the fruit of congress’s legislations, was created to lower the monthly payments of borrowers with depressed incomes. It also enlisted a law permitting the forgiveness of student loans at the culmination of 20 or 25 years of repayment. The Department of Education remains elusive on when the process will recommence after the system upgrade.
For those fortunate borrowers in the IBR plan who have hit their forgiveness limit but are robbed of their rightful relief due to this deferment, they are advised to stick to their repayment. There is an assured anticipation that the Department of Education will eventually return any overpayments. The IBR plan stipulates forgiveness after a comprehensive series of 240 or 300 monthly payments, contingent on when the borrower signed up.
As an additional measure, borrowers can also ask for a break from their loan servicer. Even with this temporary relief, the remaining balance will persistently accrue interest. While this offers little comfort for the borrowers, the Department of Education seems to be more focus on procedures than aiding the struggling students.
The next act in this saga will see Trump’s tax and expenditure law gradually eliminating the ICR, PAYE, and SAVE strategies, substituting them with the Repayment Assistance Plan. The IBR plans will fortuitously persist, and will still offer the gift of forgiveness after 20 to 25 years, in sharp variance with the Trump’s plan.
RAP, on the other hand, expects its beneficiaries to go through a grueling 30-year repayment period before being privileged for forgiveness. The perfect contrast to Biden’s imaginary plan, it has an unambiguous vision of serving struggling students. It is quite telling when compared to our current administration which has failed to take concrete steps for the betterment of students.