June 30, 2023
House Republicans Introduce Proposal to Simplify Student Loan Repayments
Republicans in the House introduced the Federal Assistance to Initiate Repayment (FAIR) Act that would restructure student loan repayment options for borrowers and put new requirements on steps the Department of Education must take prior to this fall’s resumption of student loan repayments, such as a series of borrower notifications.
Lead by Rep. Burgess Owens (R-UT), Chair of the House Subcommittee on Higher Education & Workforce Development and supported by the Committee on House Education & the Workforce Chair Virginia Foxx (R-NC), the bill (summary) would provide borrowers with two repayment options: 1) the standard 10-year repayment plan; or 2) a new income-driven repayment (IDR) plan.
For borrowers who choose the new IDR plan their total payments would be capped at the total principal and interest they would have been charged had they paid off the loan in ten years. Borrowers would have to pay at least 10% of their discretionary income. Special provisions would be made for distressed borrowers who have an annual gross income of less than 300% of the federal poverty line and who are barely making interest payments. Others above this income level can also qualify if they make certain payment amounts each month.
Other provisions in the bill would take away the secretarial authority to expand borrower benefits beyond those outlined in law. The bill is a counter proposal to the Biden Administration’s proposed IDR plan, which Republicans see as too costly to taxpayers.
Lead by Rep. Burgess Owens (R-UT), Chair of the House Subcommittee on Higher Education & Workforce Development and supported by the Committee on House Education & the Workforce Chair Virginia Foxx (R-NC), the bill (summary) would provide borrowers with two repayment options: 1) the standard 10-year repayment plan; or 2) a new income-driven repayment (IDR) plan.
For borrowers who choose the new IDR plan their total payments would be capped at the total principal and interest they would have been charged had they paid off the loan in ten years. Borrowers would have to pay at least 10% of their discretionary income. Special provisions would be made for distressed borrowers who have an annual gross income of less than 300% of the federal poverty line and who are barely making interest payments. Others above this income level can also qualify if they make certain payment amounts each month.
Other provisions in the bill would take away the secretarial authority to expand borrower benefits beyond those outlined in law. The bill is a counter proposal to the Biden Administration’s proposed IDR plan, which Republicans see as too costly to taxpayers.
For more information, please contact:
Sarah Flanagan