Currently, under IDR, which is affordable by definition, borrowers pay about 10% of their discretionary income over about 20 years, and whatever’s left—including all accrued interest—is forgiven.
But the new rules dramatically change the calculus:
- Payments are generally cut in half from 10% to 5% of income
- The number of payments is generally cut in half from 20 years to 10 years
- And the income under which payments are reduced to $0 is raised from 150% to 225% of the poverty line
- All payments, including “payments” of $0, trigger cancellation of that month’s interest.
Of course, this creates a host of problems.
- This is just another forgiveness scheme that will cost well over $100 billion. That's roughly $675 out of each taxpayer's pocket.
- Colleges raise tuition when loans are made easier and more lenient. It's an unsustainable cycle we'll never escape until Congress fundamentally overhauls student loans.
- Unfair to those who repaid their loans, those who never took on debt by avoiding college or working their way through school, those who joined the military, etc.
But you have a chance to fight back!
