Excerpt from the Winter 2023 issue of The Extension
In January the Biden Administration introduced a new REPAYE (Revised Pay As You Earn) plan to help student borrowers reduce their monthly payments by up to onehalf, further easing the burden for the one-third of recipients who already struggle to repay their debt.
Many low-income borrowers will essentially have their payments zeroed out, and after 20 years any remaining balance will be forgiven. Parents who took out PLUS loans are excluded from the proposed plan. They must pay 20 percent of their disposable income for 25 years before any remainder is forgiven. It’s not clear what happens if parents die before completing their payment plan.
The Supreme Court is currently reviewing the forgiveness plan and is expected to strike it down, leaving millions of needy borrowers in search of other paths to debt relief. Implementation of the program has been delayed until July 2023, perhaps because Congress failed in the most recent omnibus bills to provide funding to the Education Department’s Office of Federal Student Aid.
Sound confusing and hopelessly complicated? You bet. Expect further revisions, retreats, and refinements as we go along. Forbes advises: “All borrowers should carefully review the administration’s published guidance on the account adjustment, which is periodically updated, often without any formal announcement.”