This will make Rwingers' heads explode.
Currently ol' Joe's SecEd is prepping to go in front of the SCOTUS in March 2023 to argue against the various State Attorney's lawsuit to quash Joe's 10K - 20K student loan forgiveness.
Very cool.
...but the following is what will make Rwing heads explode.
Pretty much, everyone will be steered into Income Driven Repayment (IDR) currently set at 10% of discretionary income. On July 1, 2023, the maximum monthly repayment amount will go down to 5% of discretionary income.
Currently, if you have income-based repayment and your payments aren't enough to pay the interest on the loan, the unpaid amount of interest is capitalized back into your loan, so your balance still keeps rising every year.
Under the new plan, if a borrower’s payment isn’t high enough to cover the interest due that month, the remaining interest will not be charged or tacked onto the balance as it is today.
Additionally, the new proposal would tweak the definition of "discretionary income" - which currently uses a formula designed to exclude costs of food and rent for a given area - the new definition will exempt more income, which would result in lower payments, too. And instead of having to recertify your income-based repayment every year (oh yeah, I need to do that! Us student loan IDR'ers have to this by July 31st every year), borrowers who opt in to allow sharing of their information from IRS can just let the Student Loan program recalculate it annually.
But wait! There's more!!!
Back in April 2022, the Education Department announced it would be making up for some very bad behavior on the part of a lot of loan servicers by doing a one-time adjustment to the amount of time that borrowers need to make payments.
You see, the Education Department requires loan servicers to inform borrowers of all their repayment options so their loans won't go into delinquency, including the availability of income-driven repayment plans (IDR). But a review of actual practices found that instead of doing that, a lot of loan servicing companies steered borrowers who couldn't afford to make payments to put their loans in "forbearance," which means that the borrowers didn't have to make monthly payments, but the loans continued to accumulate capitalized interest, which rolled back into the total balance owed.
This is where I raise my hand and say "Oh yeah, that was me! Nobody told me anything about IDR plans until I applied for one a few years ago!"
So for ALL OF THOSE YEARS I was in forbearance, with interested being added and added and added and added, my loan will be reset this summer so that those forbearance months will be IDR months at $0 monthly payment (Yes! You can have $0 monthly IDR payments) and will count towards the 20 year termination of the loan.
Oh...did I forget that part? Yes I did! Every student loan will now terminate after 20 years - regardless. Grad loans will terminate after 25 years.
Pretty nifty huh?!? Thank you dark Brandon!!!
SOURCE:
Federal Registry
