Advisor information presented at October 8, 2021 Negotiated Rulemaking

1. IDR program trends

2. Preliminary IDR Simulations: Changes to payment percentage and income protection

1

Note: This document was prepared by Dr. Rajeev Darolia, Advisor for economic and higher education policy analysis and 

data, for the 2021 Affordability and Student Loans Committee Meetings as part of the 2021-22 US Department of Education 

Negotiated Rulemaking for Higher Education. Please forgive any errors in analyses produced in an expeditious manner.
Income-driven repayment plan trends, Q4 2016-Q2 2021

$600 60%

$500 50%

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$400 40%

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$300 30%

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$200 20%

h SRDI

$100 10%

$0 0%

2016Q4 2017Q4 2018Q4 2019Q4 2020Q4

IDR $

& Share of Total $ Outstanding $538B

48%

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42%

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$309B

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IDR $ Share

IDR $ Outstanding

0%

5%

10%

15%

20%

25%

30%

35%

40%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2016Q4 2017Q4 2018Q4 2019Q4 2020Q4

IDR Share of Total Recipients

IDR Recipients (in millions)

IDR Recipients IDR Recipient Share

33%

27%

9.1M

6.1M

IDR Recipients 

& Share of Total Recipients

Sources: Federally Managed Portfolio by Repayment Plan. Available at: https://studentaid.gov/data-center/student/portfolio. 
Income-driven repayment plan trends, continued

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2016Q4 2017Q4 2018Q4 2019Q4 2020Q4

$ Recipients

with Partial Financial Hardship

$0

$50

$100

$150

$200

$250

2017Q4 2018Q4 2019Q4 2020Q4

Dollars Outstanding (in billions)

Public Private Proprietary

IDR $ Outstanding by Institution Type

Note: Chart for partial financial hardship includes only IBR and PAYE plans only. Sources: Federally Managed Income-Driven Repayment Plans by Partial Financial Hardship and 

Income-Driven Portfolio by School Type. Available at: https://studentaid.gov/data-center/student/portfolio. 

IDR Share of $ and Recipients 
Preliminary IDR Simulations: Caveats

● Estimates are for illustrative purposes about individual repayment scenarios

● Does not incorporate common repayment events that can affect borrower outcomes, 

such as periods of unemployment, nonpayment, forbearance, deferment, etc.

● Interest capitalization assumptions are critical to loan forgiveness estimates

4
Fictional borrower example (Iris)

• Income = $33,000 annually, $2,750 monthly

• 2.5% increase each year

• Student loan debt = $28,000

• Household size = 1

• Interest rate = 3.73%

• Inflation assumption 2.4% annually

5

IBR payment calculation, period 1

• Monthly payment increases as income increases

• Both income protection and income share reduce the 

monthly payment, but are affected by different inputs

Standard 

Repayment IBR (2014)

Monthly payment $273 $114-$187

Total paid $32,707 $35,439 

Total forgiven $0 $8,086

Payments 120 240

Results differ slightly from the FSA loan simulator because of simplified assumptions regarding inflation. Inflation is based on the average estimate for the next 10 years from the 

Congressional Budget Office (https://www.cbo.gov/publication/56982). Interest rate is the current interest rate on Direct Subsidized Loans and Direct Unsubsidized Loans: 

https://studentaid.gov/understand-aid/types/loans/interest-rates. No assumed grace period or temporary repayment flexibilities due to the COVID-19 Emergency.

Monthly income $2,750

Protected income (150% poverty line) -$1,610

-----------

Discretionary income $1,140 

Income Share x10%

-----------

Period 1 payment $114 
Fictional borrower example (Iris), Under other assumptions

6

Base case 5% Income Share

Monthly income $2,750

(150% poverty line) -$1,610

------------

Discretionary income $1,140 

Income Share x10%

-----------

Period 1 payment $114

Monthly income $2,750

(150% poverty line) -$1,610

------------

Discretionary income $1,140 

Income Share x5%

-----------

Period 1 payment $57 

200% PL Income Protection

Monthly income $2,750

(200% poverty line) -$2,147

------------

Discretionary income $603

Income Share x10%

-----------

Period 1 payment $60 
Fictional borrower example (Iris), Under other assumptions, Summary

IBR (2014)

Current Case 1 2 3

Poverty Line Income Protection 150% 150% 150% 200%

Income Share 10% 7.5% 5% 10%

Monthly payment $114-$187 $86-$140 $57-$93 $60-$103

Total paid ~$35,000 ~$27,000 ~$18,000 ~$19,000

Total forgiven ~$8,000 ~$21,000 ~$28,000 ~$27,000

Payments 240 240 240 240

Interest-only payments 0 ~12 ~200 ~170

Estimates only. Assumed inputs: income = $33,000 annually, $2,750 monthly; 2.5% increase each year; Student loan debt = $28,000; Household size = 

1; Interest rate = 3.73%; Inflation assumption 2.4% annually. Assumes unpaid interest is added to principal.

As income share gets lower than 5%, or income protection gets higher than 200%, this fictional borrower would have an increasing number of interestonly payments, and loan forgiveness would increase, depending on assumptions related to interest accrual. 

I am thankful for input from Lexi West and staff at The Pew Charitable Trusts for contributions on the construction of these scenarios. 7