The Backdoor Student Loan “Forgiveness” the Media Isn’t Talking About

Even with the Supreme Court poised to potentially strike down the Biden administration’s blanket student loan cancellation plan, the Biden Education Department has proposed a consequential, expensive, and regressive regulation in the Title IV student loan program, “Income Driven Repayment” (IDR). Proposed regulatory changes to IDR would reduce a borrower’s required monthly payments from 10% to 5% of discretionary income, increase the amount of exempt income from 150% to 225% of the federal poverty line, and reduce the time to ultimate student loan “forgiveness” from 20 years to just 10 years. As such, it would create perverse incentives that would effectively enact "free" college through the backdoor—but only for low-return majors. In fact, an estimated 22% of borrowers who repay their loans under the proposed IDR terms would never make a single payment before their balances are cancelled by taxpayers. The administration’s proposed IDR rule also presents significant legal concerns.

These momentous changes in the student loan program have received less attention than the administration’s blanket loan cancellation proposal, but are just as significant for students, taxpayers, and the future cost of college. Learn why as experts from Defense of Freedom Institute for Policy Studies, Urban Institute, Texas Public Policy Foundation, and the Foundation for Research on Equal Opportunity join Heritage’s Lindsey Burke for an in-depth discussion.

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