Proposed Solutions

 1. Lower time to forgiveness

• Provide “sign-on” forgiveness at an amount of at least $10,000 

• Forgiveness at 10 years of repayment

• Include expanded qualifying payments

• Implement a loan lifetime at 25 years regardless of repayment

2. Monthly payment reduction 

• Loan payment calculated at 5% of discretionary income

• Increase protected income to 250%

• Cap payments at the calculated amount under the 10-year 

payment plan

3. Prevent balance increase from interest accrual 

• Provide subsidies at 0%; and/or 

• Interest subsidies proportional to payment as to not increase 

loan balance; 

 4. Include as many loan types as possible

• Include Parent Plus Loans
Justifications

1. Lower time to forgiveness

Provide “sign-on” forgiveness at an amount of $10,000 

Provides a solution for mass student debt cancellation. Canceling $10,000 of student debt 

would eliminate low balance loans for borrowers. Forgiveness regardless of balance would 

incentivize participation in the new ICR program and encourage borrowers to remedy loans out 

of deferment or default creating opportunity for increased recovery of investment.

Forgiveness at 10 years of repayment 

Ten years has a rational basis in public policy. Congress, in creating the 10-year standard 

repayment period, identified 10 years as the appropriate amount of time that borrowers should be 

encumbered by their student loan debt. Congress then reiterated this number in creating the 

Public Service Loan Forgiveness program. Since creating the PSLF program, the nature of 

employment for public service workers has changed. Many public service workers - low income 

workers of color in particular, work through for-profit companies, despite doing "public service" 

and earning relatively low wages. Moreover, the work that can be considered "public service" 

has also changed. As demonstrated by the pandemic, grocery store workers, restaurant workers, 

etc are "essential workers" but are not captured by the definition in PSLF. By utilizing a 10 year 

period for IDR, we can deliver the promise that Congress made to these borrowers.

- Any payment of any plan should count to the forgiveness timeline 

Implement a loan lifetime at 25 years 

Borrowers should not be in a situation of being encumbered by student loan debt after 

+30 years. Student loans should not be a lifetime of debt regardless of circumstances. 

2. Monthly payment reduction

Loan payment calculated at 5% of discretionary income 

- Current plans do not provide sufficiently low monthly payment options 

3. Prevent balance increase from interest accrual 

Provide subsidies at 0%; and/or Interest subsidies calculated proportional to payment as to not 

increase balance; 

The psychological impact of loan balances increasing during repayment have a vast array 

of negative effects. 

4. Include as many loan types as possible 

- Include Parent Plus Loans 
Proposed Regulatory Text with Edits for Issue Paper #10: Income-driven Repayment Plans

 

§ 685.209 Income-driven repayment plans.

(a) General. Income-driven repayment (IDR) plans are plans that are intended to keep payments 

affordable to borrowers by basing payments on income and family size instead of loan debt and interest 

rate. There are 5 IDR plans:

(1) The Income-Contingent Repayment (ICR) Plan;

(2) The Income-Based Repayment (IBR) Plan;

(3) The Pay As You Earn (PAYE) Repayment Plan;

(4) The Revised Pay As You Earn (REPAYE) Repayment Plan; and

(5) The Expanded Income-Contingent Repayment (EICR) Plan. The Borrower Earnings 

Adjusted Repayment (BEAR) Plan

(b) Definitions.

(1) Other definitions TK Lifetime of Loan means for the purpose of BEAR plan the total length 

of time from the date a loan enters repayment to the time it is forgiven or has no outstanding 

balance on such a loan

(2) Partial Financial Hardship means a circumstance in which the amount a borrower (and, as 

applicable, the borrower’s spouse) would pay on the 10-year standard repayment plan on eligible 

loans for the purposes of proration is more than what the borrower would pay on the IBR or 

PAYE Plan as determined under subsection (e). To determine whether the borrower has a partial 

financial hardship, the Secretary uses the greater of the balances that were outstanding on the 

borrower's eligible loans at the time the borrower entered repayment on the loans or the balances 

on those loans that were outstanding at the time the borrower requested to enter the IBR or PAYE 

Plan and takes a spouse’s income and loan debt into consideration consistent with subsection (d).

(3) Eligible new borrower means for the purpose of the PAYE Plan means an individual who - 

(A) Has no outstanding balance on a Direct Loan Program loan or a FFEL Program loan 

as of October 1, 2007, or who has no outstanding balance on such a loan on the date he or 

she receives a new loan after October 1, 2007; and 

(B) Receives a disbursement of a Direct Subsidized Loan, Direct Unsubsidized Loan, 

student Direct PLUS Loan, or a Direct Consolidation Loan on or after October 1, 2011.
(4) New borrower means for the purposes of the IBR Plan means an individual who has no 

outstanding balance on a Direct Loan Program or FFEL Program loan on July 1, 2014, or who 

has no outstanding balance on such a loan on the date he or she obtains a loan after July 1, 2014.

(5) Eligible loans for the purposes of proration means loans under subsection (d) as well as 

FFEL Stafford Loans, FFEL PLUS Loans made to graduate/professional students, and FFEL 

Consolidation Loans that did not repay a FFEL, or Direct PLUS Loan made to a parent borrower.

(6) Discretionary income means for the ICR plan, the difference between the applicable total 

income determined in accordance with subsections (e) and (l) and 100 percent of the applicable 

poverty guideline; for the IBR, PAYE, and REPAYE , and EICR plans, it means the difference 

between the applicable total income and 150% of the applicable poverty guideline or $0, 

whichever is greater; for the BEAR plan, it means the difference between the applicable total 

income and 250% of the applicable poverty guideline or $0 whichever is greater. 

(7) Family size means the number of individuals that is determined by summing:

(A) For all IDR plans, the borrower; 

(B) For the ICR, IBR, and PAYE plans, the borrower's spouse

(C) For the REPAYE plan, the borrower’s spouse, but only if the spouse’s income is 

included in the calculation of the borrower’s monthly payment amount under subsection 

(e); 

(D) For all IDR plans, the borrower’s children, including unborn children who will be 

born during the year the borrower certifies family size, if the children receive more than 

half their support from the borrower; and

(E) For all IDR plans, other individuals if, at the time the borrower certifies family size, 

the other individuals live with the borrower and receive more than half their support from 

the borrower and will continue to receive this support from the borrower for the year for 

which the borrower certifies family size. 

(8) Support includes money, gifts, loans, housing, food, clothes, car, medical and dental care, and 

payment of college costs.

(9) Poverty guideline refers to the income categorized by State and family size in the poverty 

guidelines published annually by the United States Department of Health and Human Services 

pursuant to 42 U.S.C. 9902(2). If a borrower is not a resident of a State identified in the poverty 

guidelines, the poverty guideline to be used for the borrower is the poverty guideline (for the 

relevant family size) used for the 48 contiguous States. 

(c) Borrower eligibility.
(1) Borrowers are eligible for the ICR, REPAYE, and EICR BEAR plans if they have eligible 

loans;

(2) Borrowers are eligible for the IBR Plan if they have eligible loans and have a partial financial 

hardship when they initially enter the plan; and

(3) Borrowers are eligible for the PAYE Plan if they have eligible loans, are an eligible new 

borrower, and have a partial financial hardship when they initially enter the plan.

 

(d) Loans eligible to be repaid under an IDR plan.

(1) For ICR, IBR, PAYE, and REPAYE plans, eligible loans are Direct Subsidized Loans, Direct 

Unsubsidized Loans, Direct PLUS Loans for graduate/professional borrowers, and, except for the 

ICR plan, Direct Consolidation Loans that did not repay a Direct or FFEL PLUS Loan for 

parents; 

(2) For the ICR plan, eligible loans also include Direct Consolidation Loans that repaid a Direct 

or FFEL PLUS Loans for parents;

(3) For the EICR plan, eligible loans are TK. Direct Subsidized Loans, Direct Unsubsidized 

Loans, Direct PLUS Loans for graduate/professional borrowers, PLUS Loans for parents, and 

Direct Consolidation Loans

(e) Treatment of married borrowers. (1) Income. Unless a married borrower certifies that the borrower is 

separated from the borrower’s spouse or unable to reasonably access the spouse’s income, a spouse’s 

income is included in the calculation of the borrower’s monthly payment amount for the tax year of the 

income the Secretary uses to calculate the borrower’s monthly payment under the following conditions:

(A) For the ICR Plan, if the borrower and spouse file a joint Federal income tax return or 

the borrower and spouse elect to repay their Direct Loans jointly under the ICR plan;

(B) For the IBR, PAYE, or EICR BEAR plans, if the borrower and spouse file a joint 

Federal income tax return; and

(C) For the REPAYE plan, regardless of whether the borrower and spouse file a joint 

Federal income tax return.

(2) Loan debt.

(A) For the IBR, PAYE, REPAYE, and EICR BEAR plans, the spouse’s eligible loan 

debt for the purposes of adjusting the payment amount and to perform the calculation as 

described in subsection (g), is included in the calculation of the borrower’s monthly 
payment amount if the spouse’s income is included in the calculation of the borrower’s 

monthly payment amount.

(B) For the ICR plan, the spouse’s loans meeting the criteria of paragraph (d)(2) of this 

section are only included in the calculation of the borrower’s monthly payment amount if 

the borrower elects to repay the borrower’s eligible Federal student loans jointly under 

the ICR plan.

 

(f) Setting payment amounts.

(1) For the ICR Plan, payments are the lesser of:

(A) What the borrower would have paid under a repayment plan that is based on a 12-

year repayment plan and that has fixed payments, based on the amount that borrower 

owed when the loan entered the ICR plan multiplied by a percentage based on income 

established by the Secretary in a Federal Register notice updated annually to account for 

inflation; or

(B) 20% of discretionary income, divided by 12.

(2) For those who are not new borrowers under the IBR Plan, payments are the lesser of:

(A) 15 percent of discretionary income, divided by 12; or

(B) What the borrower would have paid on a 10-year standard repayment plan based on 

the loan balance and interest rate that were applicable to the loans at the time the 

borrower entered the IBR Plan.

(3) For new borrowers under the IBR Plan and for all borrowers on the PAYE Plan, payments are 

the lesser of:

(A) 10 percent of discretionary income, divided by 12; or

(B) What the borrower would have paid on a 10-year standard repayment plan based on 

the loan balance and interest rate that were applicable to the loans at the time the 

borrower entered the IBR or PAYE plans.

(4) For the REPAYE Plan, payments are 10 percent of discretionary income, divided by 12.

(5) For the EICR BEAR Plan, payments are TK 5 percent of discretionary income, divided by 12; 

(5) For the BEAR Plan, payments are the lesser of:

(A) 5 percent of discretionary income, divided by 12; or
(B) What the borrower would have paid on a 10-year standard repayment plan based on 

the loan balance and interest rate that were applicable to the loans at the time the 

borrower entered the BEAR Plan.

(6) For all IDR plans, a borrower’s payment will be $0 if the borrower’s discretionary income is 

equal to or less than the applicable poverty guidelines.

(g) Adjustments to monthly payment amounts. Payments calculated under paragraph (f) are adjusted in 

the following circumstances:

(1) In cases where the spouse’s loan debt is included in the borrower’s monthly payment amount, 

the borrower’s payment is adjusted by taking the outstanding principal and interest balance of the 

borrower’s eligible loans for the purposes of proration and dividing that by the couple’s combined 

outstanding principal and interest balance on eligible loans for the purposes of proration.

(2) In cases where the borrower also has loans made under the FFEL Program, the borrower’s 

payment is adjusted by taking the outstanding principal and interest balance of the borrower’s 

loans eligible to be repaid under an IDR plan and dividing that by the borrower’s outstanding 

principal and interest balance on eligible loans for the purposes of proration.

 

(h) Interest subsidies. 

(1) For the ICR Plan, there are no interest subsidies; 

(2) For the PAYE and REPAYE plans, there is an interest subsidy on Direct Subsidized Loans 

and Direct Subsidized Consolidation Loans that a borrower is eligible to receive during first 3 

years of repayment under the PAYE and REPAYE plans, but only when the amount of the 

payment attributable to the loans is less than the amount of interest accruing on such loans; in 

such cases, the Secretary credits the borrower’s account with an amount equal to the amount of 

interest not covered by the borrower’s payment;

(3) For the IBR Plan, the 3-year period described in paragraph (2) is suspended for any month 

during which the borrower is not obligated to make a payment because they are in an economic 

hardship under § 685.204(g);

(4) For the REPAYE plan, following the 3-year period described in paragraph (2) for Direct 

Subsidized Loans and Direct Subsidized Consolidation Loans, and during all periods of 

repayment under the REPAYE Plan on all other loans eligible to be repaid under REPAYE, there 

is an interest subsidy when the amount of the payment attributable to the loans is less than the 

amount of interest accruing on such loans; in such cases, the Secretary credits the borrower’s 

account with an amount equal to half of the amount of interest not covered by the borrower’s 

payment; and
(5) For EICR BEAR, in cases where the borrower’s monthly payment is scheduled to be $0, TK

100 percent of interest is not charged to the borrower.

(i) Changing repayment plans. Borrowers may change between IDR plans for which they are eligible or 

leave an IDR plan for another repayment plan for which they are eligible.

 

 

(j) Interest capitalization. 

(1) For the ICR, REPAYE, and EICR BEAR plans, interest only capitalizes when it otherwise 

would under § 682.202(b).

(2) For the IBR or PAYE plans, interest capitalizes when the borrower’s payment becomes the 

amount under paragraphs (f)(2)(B) and (f)(3)(b), except that when payments are set based on 

paragraph (f)(2)(A) and (f)(3)(A), interest capitalization rules under § 682.202(b) are suspended.

(3) For the IBR Plan, interest also capitalizes when the borrower’s payments are set in 

accordance with subsection (f)(2)(b) or when the borrower leaves the IBR Plan.

(k) Forgiveness.

(1) For borrowers repaying under ICR, for borrowers repaying under the IBR plan who are not 

new borrowers, and for borrowers repaying under the REPAYE and EICR plan who are repaying 

at least one loan received for graduate or professional study, including a Direct Consolidation 

Loan that repaid one or more loans received for graduate or professional study, the borrower 

receives forgiveness of the remaining balance of the borrower’s loans after the borrower has 

satisfied 300[MM1] monthly repayment obligations under paragraph (34); 

(2) For borrowers repaying under PAYE, for borrowers repaying under the IBR plan who are 

new borrowers, and for borrowers repaying under the REPAYE and EICR plan who are repaying 

only loans received for undergraduate study, including a Direct Consolidation Loan that repaid 

only loans received for undergraduate study, the borrower receives forgiveness of the remaining 

balance of the borrower’s loans after the borrower has satisfied 240[MM2] monthly repayment 

obligations under paragraph (34); 

(3) For borrowers repaying under the BEAR plan the borrower receives forgiveness under the 

following conditions:

(A) for borrowers who are repaying at least one loan received for graduate or professional 

study, including a Direct Consolidation Loan that repaid one or more loans received for 

graduate or professional study, the borrower receives forgiveness of the remaining 

balance of the borrower’s loans after the borrower has satisfied 210 monthly repayment 

obligations under paragraph (34); 
(B) for borrowers who are repaying only loans received for undergraduate study, 

including a Direct Consolidation Loan that repaid only loans received for undergraduate 

study, the borrower receives forgiveness of the remaining balance of the borrower’s loans 

after the borrower has satisfied 120 monthly repayment obligations under paragraph (34); 

 

(C) The borrower receives forgiveness of the remaining balance of the borrower’s loans 

at the expiration of a 25-year loan lifetime. 

(D) Upon enrollment on the BEAR plan the borrower receives partial forgiveness of 

$10,000 or the total of the remaining balance, whichever is less. 

(34) For all IDR plans, the following can lead to the borrower satisfying a monthly repayment 

obligation:

(A) Making a payment under an IDR plan, including payments that are calculated to be 

$0, regardless of whether the payment was satisfied early or late;

(B) Making a payment under the 10-year standard repayment plan under § 685.208(b), 

regardless of whether the payment was satisfied early or late; 

(C) Making a payment under a repayment plan with payments that are as least as much as 

they would have been under the 10-year standard repayment plan under § 685.208(b), 

regardless of whether the payment was satisfied early or late;

(D) Deferring or forbearing monthly payments for the following reasons:

(i) A cancer treatment deferment under 455(f)(3) of the Act; 

(ii) A Peace Corps service deferment under §682.210(k), as applicable to Direct 

Loan borrowers under §685.204(j);

(iii) An economic hardship deferment under §685.204(g);

(iv) A military service deferment under §685.204(h);

(v) An administrative forbearance or mandatory administrative forbearance under 

§ 685.205(b);

(vi) A medical or dental internship or residency forbearance under § 

685.205(a)(3); 

(vii) A national guard duty forbearance under § 685.205(a)(7); or

(vii) A Department of Defense Student Loan Repayment forbearance under § 

685.205(a)(9)

(v) A rehabilitation training program deferment §685.204(e);

(vi) A unemployment deferment §685.204(f);
(vii) A post-active duty student deferment §685.204(i);

 

(l) Procedures. 

(1) To enter any IDR plan, and except as provided under TK, the borrower must complete an 

application on a form approved by the Secretary;

(2) As part of the process of completing a Master Promissory Note or a Loan Consolidation 

Promissory Note, the borrower must consent to the disclosure of applicable tax information under 

§§ 455(e)(8) and 493C(c)(2) of the Act

(3) As part of the application for an IDR plan, and if the borrower has not already done so, the 

borrower must consent to the disclosure of applicable tax information under §§ 455(e)(8) and 

493C(c)(2) of the Act

(4) The Secretary uses the borrower’s consent under paragraphs (2) (3) to obtain the borrower’s 

income and family size from the Internal Revenue Service;

(5) If the Secretary cannot obtain the borrower’s income and family size from the Internal 

Revenue Service, the Secretary requires the borrower and spouse, as applicable, to provide 

documentation of applicable income and family size information;

(6) After the Secretary obtains sufficient information from the borrower or otherwise to calculate 

the borrower’s monthly payment amount, the Secretary calculates the borrower’s payment and 

establishes the 12 monthly repayment obligations for which the borrower will be obligated to 

make a payment in that amount;

(7) The Secretary then sends to the borrower a repayment disclosure outlining the borrower’s 

payment amount, explains in general terms how the payment is calculated, informs the borrower 

of the procedures that will be followed under this subsection, and requests that the borrower 

contact the Secretary if the payment amount disclosed to the borrower is unaffordable to the 

borrower; 

(8) If the borrower contacts the Secretary and indicates the payment amount is not reflective of 

the borrower's income or family size, the Secretary allows the borrower to submit alternative 

documentation of income or family size not based on tax information to account for 

circumstances such as a decrease in income since filing a tax return, separation from a spouse 

following filing taxes jointly with that spouse, the birth or impending birth of a child, or other 

comparable circumstances;

(9) If the borrower provides alternative documentation under paragraph (8) or the Secretary must 

obtain documentation from the borrower or spouse under paragraph (5), the Secretary places the 

borrower’s loans into an administrative forbearance under § 685.205(b)(9) to promptly process 

the borrower’s application and information;
(10) On an annual basis the Secretary follows the procedures in paragraphs (4) through (9) once 

the borrower only has 3 monthly payments remaining under the 12-month period specified under 

paragraph (6).

(11) If the Secretary requires information from the borrower under paragraph (5) to recalculate 

the borrower’s monthly repayment amount under paragraph (10), and the borrower does not 

provide the necessary documentation to the Secretary by the time the last payment is due under 

the 12-month period specified under paragraph (6), then:

(A) For the IBR and PAYE plans, the borrower’s monthly payment amount is the amount 

under paragraph (f)(2)(B) or (f)(3)(B);

(B) For the ICR Plan, the borrower’s monthly payment amount is the amount the 

borrower would have paid under a 10-year standard repayment plan based on the loan 

balance and interest rate that existed for the loan when the borrower entered ICR;

(C) For the REPAYE Plan, the borrower is removed from the REPAYE plan and placed 

into an alternative repayment plan under § 685.208(j) with fixed payments that are 

amortized over a period of time that is equal to the lesser of:

(i) 10 years; or

(ii) The remaining period of time that the borrower would have needed to repay 

loans under the REPAYE plan to receive forgiveness under subsection (j);

(D) For the EICR BEAR Plan TK.

(12) At any point during the 12-month period specified under paragraph (6), the borrower may 

request that the Secretary recalculate the borrower’s payment earlier than would have otherwise 

been the case to account for a self-reported change in the borrower’s circumstances; in such 

cases, the 12-month period specified under paragraph (6) is reset based on the borrower’s new 

information.

(13) The Secretary tracks a borrower’s progress towards eligibility for forgiveness under 

subsection (k) automatically and forgives loans that meet the criteria under subsection (k) without 

the need for an application or documentation from the borrower.

 

 [MM1]For simplicity we could apply this to all the plans. Lower this to 210 here

 [MM2]120