Cost estimates for Income-Driven Repayment plans are unreliable
For the fiscal year 2017 budget, the Department of Education (ED) estimated that Income-Driven Repayment (IDR) plans will cost $74 billion. Actual costs will depend on how many borrowers participate in IDR plans and how much (or how little) those borrowers earn over time. After reviewing how ED produces its cost estimates, the Government Accountability Office (GAO) criticized aspects of ED’s methodology and concluded that ED’s cost estimates are not reliable. GAO found that ED’s methods may both over- and under-state actual…
Enrollment in Income-Driven Repayment is Up
Nerds like me will want to check out recently released updates to the Department of Education’s Federal Student Aid Data Center for reports including outstanding balances and recipients by loan program, loan type, loan status, repayment plan, and delinquency status. Unemployment and economic hardship deferments are down 31.5 percent from the previous year, as enrollment in income-driven repayment plans has increased. As of December 31, 2015, approximately 4.8 million borrowers are enrolled in Income-Driven Repayment plans.
Comparing Income-Driven Repayment Plans
There are now five different income-driven repayment plans: Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), Income-Based Repayment for New Borrowers (New IBR), and now Revised Pay As You Earn (REPAYE). Calculating Monthly Payments Income-driven plans calculate payments as a percentage of “discretionary income”. Discretionary income is defined as the difference between a borrower’s Adjusted Gross Income (AGI) and 150 percent of the poverty guideline for the borrower’s family…
Who Will Benefit from the Expansion of Pay As You Earn (PAYE)?
Negotiated rulemaking, affectionately referred to as Neg Reg, is underway! Committee members met to discuss a proposed agenda, and the Department of Education will release the committee’s final agenda before they reconvene on March 31st. Over three months the negotiators will discuss, among other things, how to implement the President’s directive to expand Pay As You Earn to five million additional borrowers by the end of this calendar year. The Department of Education has proposed creating a new plan, PAYE2, for Direct Loan borrowers…
Lawyers Representing Student Loan Borrowers
I am delighted to provide free general information for student loan borrowers and the people who love them, but as an attorney, I must be very careful not to inadvertently establish a client-lawyer relationship with folks I don't represent. I am licensed to practice in the state of North Carolina only and lawyers are specifically prohibited from practicing in states in which we are not licensed. Also, lawyers can establish a client-lawyer relationship even without agreeing to do so. That's why I…
