New Student Loan Regulations Introduce ICR-A
The Department of Education today published proposed regulations implementing a better, faster, and stronger repayment option for student loan borrowers.
Formerly known as President Obama’s Pay As You Earn initiative, it shall now be known by the absurdly non-descriptive name of ICR-A. [sigh] In spite of the stupid name, the new repayment option ROCKS (if you can get it…)
There is fine print of course, but here’s the gist:
- Annual payments are capped at 10 percent of “discretionary income” (IBR’s cap is 15%).
- Remaining loan balance is forgiven after 20 years of qualifying payments (IBR after 25 years).
Otherwise, ICR-A looks a lot like IBR:
- Borrowers must demonstrate what’s known as a “partial financial hardship”.
- Unpaid accrued interest is capitalized only if a borrower no longer has a partial financial hardship, or chooses to leave the plan.
- Unpaid accrued interest is subsidized for the first three years in repayment.
But ICR-A will only be available for people who:
- got their first student loan on or after October 1, 2007, AND
- got a student loan on or after October 1, 2011 (one loan can count for both requirements).
Loads more from me on the nitty gritty in the coming days and months. I kind of enjoy getting 350 pages of new student loan law to pick through; is that wrong?