Biden’s Newest Student Loan Proposal Would Allow Some Borrowers To Pay Back Only a Fraction of What They Owe

Seemingly undeterred by the multiple recent defeats of his student loan forgiveness plan in federal courts, President Joe Biden has unveiled another program designed to lower the burden of student loan costs—this time, attempting to turn federal student loans into glorified grants, a shift that is likely to result in a further acceleration of ever-increasing college costs.

In August, Biden announced a sweeping loan forgiveness proposal which, in addition to promising to forgive thousands of dollars in loans for over 20 million eligible Americans, also contained a provision noting an intent to expand currently existing student loan forgiveness programs. One such program up for reform was “income-driven repayment” (IDR), a group of five plans that allowed participants to have their monthly payments topped at a set percentage of their “discretionary income”—adjusted gross income left over after subtracting a set percent of the federal poverty threshold. Under Biden’s plan, the program would be changed to radically reduce the amount borrowers enrolled in IDR plans pay back.

On Tuesday, the Biden administration announced a full-fledged transformation of the IDR. The proposed 179-page regulation expands upon the planned changes to the IDR originally announced in August. Under the new program, which is set to be called REPAYE, the previous five IDR plans would be consolidated into one streamlined program.

Under REPAYE plans, borrowers would have their loans forgiven after just 10 years of payments—in comparison to the 20-year requirement for most current IDR plans. REPAYE would also halve the percentage of discretionary income forfeited toward student loan payments in comparison to most IDR plans—reducing the amount owed to only 5 percent for undergraduate loans. Further, the new program would expand the amount of income considered non-discretionary, rising to 22