Income-contingent repayment (IDR) plans for federal student loans were introduced as a way to help borrowers who could not make payments. Borrowers with income below 150% of the federal poverty level could make $0 payments. Once a borrower makes payments for 20 to 25 years — even if those payments are $0 — they might qualify for loan forgiveness. About half of IDR plan participants make monthly payments of $0.
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A new investigation by the NPR news site reveals that the program was “mismanaged by loan officers and the US Department of Education”. The documents revealed that out of 4.4 million borrowers who had been repaying the loans for at least 20 years, only 32 had had their loans canceled under the IDR program.
Worse still, loan servicers failed to track or keep records of loan payments to know when a borrower’s loan is eligible for cancellation.
“It’s not up to borrowers to keep a two-decade record of how their student loan repayments were made and whether every payment was considered for forgiveness,” said Abby Shafroth, an attorney at the National Consumer Law Center (NCLC), at NPR. .
Still, if you have student loan debt that you’re repaying through IDR, this could very well be your best course of action. Be proactive in tracking your loan repayments so you have proof of when your loan was canceled.
If you already have two decades of payments under your belt, call your repairman. NPR points out that “some service agents were unsure if borrowers were eligible for cancellation if they were asked, by borrowers, to perform a labor-intensive file review.” By calling and requesting this review, you can put the onus on your loan servicer to do the necessary research.
Meanwhile, advocacy groups are fighting for legislation that will put the onus on the Department of Education to track IDR loan repayments or provide large-scale debt cancellation. If you qualify for $0 payments, continue to submit those payments and maintain your own records.
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So far, 116 rights organizations have submitted a letter to the Biden administration calling for IDR reform. You can also write to your state senators and congressional representatives to show your support for the reform demand. There is hope that positive changes are on the horizon.
“We will be making operational changes to get things done, and we will fix this for borrowers who have been harmed by past failures with counting payments,” the Department of Education said in a statement to NPR.
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