Biden is making it easier for student-loan borrowers to repay debt based on their income when payments resume next year
Photo by Nicholas Kamm/AFP
- Biden is cutting some paperwork for student-loan borrowers applying for an income-driven plan next year.
- Those borrowers can self-report their income without tax documentation through July 31, 2022.
- This comes as Biden is preparing to transition 43 million student-loan borrowers back into repayment on Feb. 1.
President Joe Biden's administration has been saying it again and again: a smooth transition for 43 million federal student-loan borrowers back into repayment next year is a top priority.
One way the administration is planning to ensure that smooth transition is through changes to a major student-loan repayment program.
The Federal Student Aid (FSA) office updated its website with additional information for borrowers seeking to enroll in the income-driven repayment (IDR) plan once payments resume on February 1. IDR creates a monthly student-loan payment plan based on a borrower's income and family size, and to qualify for one of the plans, borrowers must submit tax documentation each year to prove the payments they would be making under the income-based plan are less than payments under a standard repayment plan.
But FSA has revised some of those requirements. Specifically, if borrowers were on IDR prior to the payment pause, they will not have to recertify their income until August 2022 at the earliest, and for those with direct loans, borrowers can self-report their income to apply or recertify for IDR through July 31, rather than submit any tax documentation.
Politico first reported in October that these IDR changes might be coming as part of the Education Department's efforts to create a "safety net" for borrowers next year.
Sandy Baum, a nonresident senior fellow for the Center on Education Data and Policy at the Urban Institute, previously told Insider that while she is concerned about transitioning millions of borrowers back into repayment, IDR is a good option to ensure student debt payments are affordable.
She noted, though, that the plan "is not perfectly structured. There are barriers to getting in it, and there are barriers to staying in it." Biden campaigned on reforming the program to make payments even more affordable for borrowers, but that has yet to happen.
White House Press Secretary Jen Psaki said last week that the administration will release more details on the transition back into repayment in coming weeks, and despite pressure from lawmakers and advocates to extend the pause on student-loan payments given ongoing COVID-19 cases, Psaki was clear Biden is still planning to resume those payments on February 1.
"We're still assessing the impact of the Omicron variant," Psaki said. "But a smooth transition back into repayment is a high priority for the administration. The Department of Education is already communicating with borrowers to help them to prepare for return to repayment on February 1st and has secured contract extensions with loan servicers."
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