February 9, 2022
The Honorable Miguel Cardona
United States Department of Education
830 First Street, N.E.
Washington, D.C. 20002
Dear Secretary Cardona,
The undersigned 104 organizations representing students, student loan borrowers, teachers, workers, civil rights, veterans, people of faith, and consumers write to urge you to deliver on the promise of income-driven repayment (IDR) programs for federal student loan borrowers through the creation of an IDR restoration project, or an IDR waiver.
When Congress passed the first of the modern income-driven repayment (IDR) plans in 1992, it made a promise to borrowers that federal student loan payments would be affordable, and that even if borrowers were low-income, through eventual cancellation, their student loans would not be a lifetime burden. IDR has failed to deliver on every aspect of that promise. It is time now for the Biden Administration to restore faith in IDR through the creation of an IDR waiver.
The Biden Administration recently recognized and took steps to address similar failings in the Public Service Loan Forgiveness (PSLF) program by implementing a waiver that would allow the millions of public service workers to finally benefit from the promise of PSLF. While we applaud and celebrate these efforts, we urge the Administration to simultaneously address the parallel failures of the IDR program through a similar waiver.
Cancellation under income-driven repayment has been theoretically possible since the first group of borrowers reached twenty years in repayment through the IDR program in 2016. Yet, the most recent data from ED reveals that only 32 IDR borrowers have ever successfully canceled their loans, even though 4.4 million borrowers have been in repayment for 20 years or longer. An internal analysis prepared by the largest student loan servicer, PHEAA, found that of its more than 8.5 million customers, only 48 borrowers would receive debt cancellation under IDR by 2025. Moreover, PHEAA’s internal data projects the number of IDR borrowers receiving debt cancellation will decline by 83 percent between 2022 and 2025.
The shockingly low rate of cancellation is emblematic of ED’s failure to deliver the relief Congress intended when it passed the statutes enabling the creation of these IDR programs. While they were intended to ease the burden of student debt on borrowers, IDR plans are notoriously difficult to navigate, both because of the administrative hurdles of the program and rampant servicer misconduct. To receive debt cancellation under IDR, student loan borrowers must enroll in one of the several income-driven repayment options and remain in that plan for decades. To enroll, borrowers must first know about the program, determine which plan suits their needs, submit a litany of paperwork and documentation, and then repeat this process annually for more than two decades. A September 2021 SBPC report, “Driving Into a Dead End: Why IDR Has Failed Millions with Decades-Old Debt” suggests that about half of borrowers using REPAYE—the largest IDR plan—fail to persist in the program on a year-to-year basis.
As the recent settlement between 39 states attorneys general and Navient demonstrates, servicers have consistently engaged in a variety of abusive practices and that servicers make many errors that have long-term negative consequences for borrowers. As a result, many borrowers are unable to meet annual deadlines or simply forego the very plans that could help them repay their loans successfully.
As with so many aspects of the student loan system, the failure of IDR disproportionately harms Black borrowers. The Education Trust recently published a study based on a nationwide survey of nearly 1,300 Black borrowers and in-depth interviews with 100 Black borrowers. It found that IDR plans are not easing the student debt crisis for Black borrowers; even default rates remain high, despite the availability of these plans. In short, a program created to help the most vulnerable borrowers has failed to do so on all levels. An IDR waiver is necessary to help rectify past harms done, as student loan borrowers—and, in particular, low-income borrowers and borrowers of color—have been burdened by failures in IDR program administration that created undue financial hardship.
An IDR waiver is essential to restore the broken promise of IDR. As more described in the whitepaper by the Student Borrower Protection Center, National Consumer Law Center, and Center for Responsible Lending, and IDR waiver should:
1. On a retroactive basis, count all months since the borrower entered repayment
following their grace period as qualifying months towards loan forgiveness,
regardless of which repayment plan the borrower was in, whether they were in
forbearance, and whether they were in default.
2. Provide relief automatically. All of the data that the Department of Education needs in
order to implement the IDR Waiver is readily available through NSLDS. Borrowers
should not need to affirmatively apply for this relief
3. Ensure that all federal loan borrowers, regardless of loan program, have access to
the IDR Waiver. While FFEL and Perkins loans borrowers could be eligible for IDR, so
many borrowers were not properly advised and so have failed to benefit. The IDR waiver
must apply to these borrowers who have been left behind.
We appreciate your careful consideration of these comments and look forward to further
discussion with you. Please feel free to contact Persis Yu at email@example.com for
any future follow up.