On January 10, the Department proposed regulations to reduce the cost of federal student loan payments, especially for low- and middle-income borrowers, fulfilling the commitment President Biden laid out in August when he announced the Administration’s plan to provide student debt relief for approximately 40 million borrowers and make the student loan system more manageable for all borrowers (press release).
The regulations would amend the terms of the Revised Pay as You Earn (REPAYE) repayment plan — one of the currently available income-driven repayment (IDR) plans — to offer $0 monthly payments for any individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than $62,400 annually. The regulations would also cut in half monthly payments on undergraduate loans for borrowers who do not otherwise have a $0 payment in this plan. Additionally, these regulations would ensure that borrowers stop seeing their balances grow due to the accumulation of unpaid interest after making their monthly payments (fact sheet).
While the regulations would provide critical relief to borrowers, the Administration is also committed to ensuring postsecondary institutions and programs are held accountable if they leave borrowers with unaffordable debt. The Department is working on a proposed Gainful Employment regulation that would cut off federal financial aid to career training programs that fail to provide sufficient financial value and require warnings for borrowers who attend any program that leaves its graduates with excessive debts. The same regulatory package would also include proposals to strengthen the conditions that may be placed on institutions that fail to meet the requirements of the Higher Education Act (HEA) or exhibit signs of risk.
In the meantime, the agency is taking steps to carry out the President’s announcement from August that the Department would publish a list of the programs at all types of institutions that provide the least financial value to students. To advance this effort, the agency published a Request for Information (RFI), seeking public feedback on the best way to identify such programs. This process will help ensure that the Department is considering a range of perspectives as it constructs the list (fact sheet).