DR. N • .JOYCE PAYNE 

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paynecenter.org

Sara Partridge, Ph.D. 

RELEASED FROM THE DEBT TRAP: REFORMING INCOME-DRIVEN 

REPAYMENT TO SERVE STRUGGLING BORROWERS 

The U.S. Department of Education (ED) must create a substantively different, better, and more 

generous income-driven repayment (IDR) plan than those currently offered. There is ample 

evidence that IDR is failing many borrowers, miring them deeper in debt and creating greater 

financial hurdles for them to overcome. Because these plans are meant to serve low- and 

middle-income earners, their failures also disproportionately impact Black, Latino/a, and 

women borrowers. It is imperative that ED adequately reform IDR to remedy the structural 

issues that harm the borrowers that the plan is meant to help and give younger generations a 

chance to achieve financial well-being. 

Accordingly, N. Joyce Payne Center for Social Justice at the Thurgood Marshall 

College Fund urges ED to implement these changes in the current round of IDR reform: 

Reduce the time to forgiveness 

to 15 years. 

This time period is 50% longer 

than the standard repayment 

plan period of 10 years. 

Periods of 20 or 25 years prevent 

borrowers from adequately 

saving for retirement, having 

children, starting businesses, and 

owning homes. These trends 

hinder national economic growth 

and ultimately cost society more. 

Subsidize 100% of unpaid interest 

to prevent negative amortization. 

Ballooning loan balances that 

result from payments that do not 

cover interest have detrimental, 

cascading effects on borrowers’ 

financial lives. 

Define protected income as 

300% of the federal poverty line.

Rent, healthcare, and cost of 

living expenses have all risen 

dramatically over the past 

decade. The new IDR plan must 

ensure that student loan 

payments are deducted from the 

amount beyond what a borrower 

Automatically recertify income needs to survive. 

based on data matching with IRS 

records. When an issue with re-certification 

arises, allow a one-year grace 

period before removing a borrower 

from an IDR plan. 

If their income rose during that 

period, allow them to pay the 

difference without penalty. 

To determine payment amounts, 

create a progressive, graduated 

scale based on income that 

ranges from 5% (for lower earners) 

to 10% of discretionary income 

(for higher

A progressive scale will target 

benefits to those who need it 

most, and also allow taxpayers 

to recoup funds from those who 

can pay more. 

Make the new plan available to 

all Direct Loan borrowers without 

a partial financial hardship 

requirement, as the REPAYE plan 

does. 

Permanently make the balance 

forgiven at the end of the 15-

year repayment tax-free. 

Automatically enroll borrowers at 

risk of default in the new IDR plan. 

In addition, ED should issue a waiver to give retroactive credit for previous payments under 

other plans to allow borrowers a fair chance to get on the track to forgiveness and to 

remedy past IDR program failures. 

It is essential that ED reform IDR in a meaningful way to allow generations of student loan 

borrowers to build stable financial futures. Because student loan debt creates 

disproportionate challenges for borrowers of color and women borrowers, the new IDR plan 

must be designed with these borrowers at the center. IDR reform can help ensure that higher 

education offers equal opportunity and upward economic mobility to all Americans.