Dive Brief:
- Two little-noticed changes to laws governing federal student loan repayments may be making it much easier for student loan borrowers to have their debt forgiven.
- Awareness of the federal government’s income-based repayment program has increased and enrollment in the program has surged in recent years, the New York Times reports.
- At the end of 2014, 11.8% of the federal college loan borrowers were enrolled in the program, representing nearly 25% of all federal direct loans — more than $100 billion.
Dive Insight:
The Times article suggests that the student loan crisis may have already been solved. The first change happened in 2007, when income-based repayment allowed a student loan borrower to have monthly payments capped at 15% of income and loan balances to be wiped out after 10 years of work for a government or non-profit agency. The second change was in 2010, when the income-based repayment threshold was cut to 10% of income, the non-profit/government work 10-year wipeout remained, and the overall loan forgiveness threshold was lowered to 20 years from 25 years. Currently, the student loan debt stands at $1.1 trillion, a record, and nearly 20% of the borrowers are in default.