Hi everyone.

I have a general question about IBR. I think it’s a great program, and I like knowing that after 25 years of reasonable payments, I’ll be done. But in the back of my mind, there’s always this little fear.

Is it possible the program will ever be canceled? Part of me is worried I’ll pay for 12 years or so and then all of a sudden they’ll cancel it, and then I’ll have a debt that’s even bigger than it was to start (thanks to interest). I’m already going to be 59 by the time I pay off my loans. I’d hate to think of being in retirement and still paying off loans.

Does anyone know if there are any guarantees?

Thanks!

Unlike the many government programs, Public Service Loan Forgiveness and IBR are not subject to appropriations or the budgetary process.  Because only Federal Direct Loans are eligible, when a borrower qualifies, the federal government writes off debt owed; the United States Department of Treasury does not expend revenue.  Additionally, Public Service Loan Forgiveness brings loan revenue into the Federal Direct lending program (because many borrowers will need to consolidate into Federal Direct to qualify for Public Service Loan Forgiveness).

Also, the College Cost Reduction and Access Act created savings to the federal government of about $43.6 billion by cutting subsidies previously paid to lenders (the formulas used to calculate lender yields on student loans were changed,  lender exceptional performer status was eliminated, the level of insurance provided to lenders was reduced, the lender origination fee on loans was increased, guaranty agency retention amounts were reduced, guaranty agency account maintenance fees, which are paid to guarantors annually),

It would take an act of Congress to take away Public Service Loan Forgiveness and Income-Based Repayment from borrowers.  That said, there are no guarantees in life and Congress can do what they want.  If a future Congress reconsidered Public Service Loan Forgiveness, my hope is that those borrowers who are already well along the path to Public Service Loan Forgiveness (have consolidated loans into Federal Direct, chosen a qualifying repayment plan, and completed a number of payments towards forgiveness) would be permitted to complete the forgiveness process.

Hope that helps!

-Heather’s Helper

The fear is understandable.  I believe (as my fabulous Helper posted) that both PSLF and IBR are about as secure as a government program gets.  That said, there are no guarantees in life.  My perspective is that the risk you took was in borrowing the money in the first place, and that now you are managing that risk and doing what you can to pursue benefits that are currently available to assist you.