- Biden cuts in the paperwork for student loan borrowers applying for an income-driven plan next year.
- These borrowers can self-report their income without tax documentation up to and including 31 July 2022.
- This happens as Biden prepares to transfer 43 million borrowers to student loans back for repayment on February 1st.
President Joe Biden’s administration has said it over and over again: a smooth transition for 43 million federal student borrowers back to repayment next year is a top priority.
One way the administration plans to ensure a smooth transition is through changes to a major student loan repayment program.
The Federal Student Aid (FSA) office updated its website with additional information for borrowers seeking to sign up for the income-driven repayment plan (IDR) when payments resume on February 1st. IDR creates a monthly student loan payment plan based on a borrower’s income and family size, and to qualify for one of the plans, borrowers must submit tax documentation each year to prove that the payments they would make under the income-based plan are smaller. than payments under a standard repayment schedule.
But the Danish Financial Supervisory Authority has revised some of these requirements. Specifically, if borrowers were on IDR before the payment break, they will not have to recertify their income until August 2022 at the earliest, and for those with direct loans, borrowers can self-report their income to apply or recertify to IDR through July 31, instead of to submit tax documentation.
Politico reported in early October that these IDR changes may come as part of the Ministry of Education’s efforts to create a “safety net” for borrowers next year.
Sandy Baum, a non-resident senior fellow at the Center for Educational Data and Policy at the Urban Institute, previously told Insider that while she is concerned about transferring millions of borrowers back for repayment, IDR is a good opportunity to ensure that payment of student debt is affordable.
However, she noted that the plan “is not perfectly structured. There are barriers to getting into it and there are barriers to staying in it.” Biden campaign to reform the program to make payments even more affordable for borrowers, but it has not yet happened.
White House Press Secretary Jen Psaki said last week that the administration will release more details on the transition back to repayment in the coming weeks, and despite pressure from lawmakers and advocates to extend the break with student loan payments due to ongoing COVID-19 cases, Psaki was clear that Biden is still planning to resume these payments on February 1st.
“We are still assessing the impact of the Omicron variant,” Psaki said. “But a smooth transition back to repayment is a high priority for the administration. The Ministry of Education is already communicating with borrowers to help them prepare for repayment on February 1 and has secured contract extensions with loan providers.”