Student loans

A student loan program had problems. Senators call for change : NPR

Senator Sherrod Brown of Ohio is one of three lawmakers calling for changes after an NPR investigation found mismanagement of income-contingent repayment (IDR) plans for student loans.

Kevin Dietsch/Getty Images

hide caption

toggle caption

Kevin Dietsch/Getty Images

Senator Sherrod Brown of Ohio is one of three lawmakers calling for changes after an NPR investigation found mismanagement of income-contingent repayment (IDR) plans for student loans.

Kevin Dietsch/Getty Images

Lawmakers have called for an investigation into a struggling student loan forgiveness program two weeks after an NPR report revealed the program – designed to help low-income borrowers and possibly offer them debt forgiveness – did not keep its promises.

More than 9 million borrowers are currently enrolled in income-contingent repayment (IDR) plans, which are designed to help people who cannot afford to make large monthly payments. The plans promise loan forgiveness after 20 to 25 years. But documents obtained by NPR offer stark evidence that those plans were mishandled by loan officers and the US Department of Education.

The documents shed new light on the revelation 2021 that at the time, 4.4 million borrowers had been repaying for at least 20 years, but only 32 had had their loans canceled under the IDR.

“A recent NPR investigative report found that the IDR program is riddled with problems and mismanagement, even worse than the public previously thought, which has prevented millions of borrowers from getting their loans cancelled. their debt,” a group of Democratic lawmakers said. written in a letter sent on Thursday to the Director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra.

Senator Sherrod Brown of Ohio, Senator Elizabeth Warren of Massachusetts and Senator Dick Durbin of Illinois signed the letter, which calls on the CFPB to “investigate these reports and use all of its authorities to ensure that borrowers access the benefits of the IDR program and receive the student loan forgiveness they have earned.”

Senators also sent a letter on Thursday to US Secretary of Education Miguel Cardona calling on his agency to take action.

“We urge the Department of Education (“ED”) to implement an IDR waiver, similar to the ongoing waiver for the Public Service Loan Forgiveness (“PSLF”) program, to allow borrowers to access the loan forgiveness promised to them via IDR,” the letter said.

These senators are not the only ones supporting an IDR waiver. Earlier this year, more than 100 different advocacy groups co-signed a letter to Cardona demanding a waiver that would retroactively relax the rules of the program.

NPR’s problems with IDR

Under the IDR, a monthly payment of $0 for a borrower earning less than 150% of the federal poverty level should still count toward loan forgiveness. But NPR obtained a never-before-seen review of servicers in 2016, conducted by the Department of Education’s Office of Federal Student Assistance, in which officials warned that these $0 IDR payments “are not tracked in a meaningful way. adequate”.

Nearly half of all IDR borrowers make $0 monthly payments, according to a 2019 analysis by the Center for American Progress (CAP). Failure to keep up with these payments could delay or derail millions of lower-income borrowers on their way to loan forgiveness.

Documents obtained by NPR also revealed other irregularities in the way the services account for IDR payments.

For example, if a monthly payment of $100.01 is due but a borrower only pays $100 – a penny less than the required amount – three loan officers said they would still consider it an eligible payment. . But four others said they wouldn’t.

In response to NPR’s initial investigation, the Department of Education said, “Borrowers trust us to ensure these plans work as intended, and we intend to honor that trust. We are aware historical issues with past processes that had undermined the accurate tracking of eligible payments. The current situation is unacceptable and we are committed to addressing these issues.”

What’s next for IDR?

Implementing an IDR waiver could help put eligible borrowers back on the path to loan cancellation. But not everyone thinks the remedy should rest solely with the Department of Education.

Beth Akers, who studies student loans at the conservative American Enterprise Institute (AEI), told NPR she supports the IDR idea — but she blames lawmakers for creating a suite of programs as difficult to implement.

“We’re not going to clean up these programs without legislation,” Akers said. “The repairers have a thankless job. The Ministry of Education too, because they have been handed a pile of garbage.”

NPR has reached out to the CFPB and the Department of Education to comment on the letters and will update this story with their responses.

NPR is committed to reporting pressing issues that matter to you, such as student loans. Subscribe to our Education newsletter to stay up to date. You can support NPR’s reliable and lifesaving coverage by donate to your local NPR station today.