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From Heather Jarvis:
On the one hand, the administration proposes to extend PAYE to all student borrowers starting in 2015, regardless of when they borrowed. That would be nice.
But the administration proposes sharply reducing the loan forgiveness available to high-debt student loan borrowers (except they refer to these cuts as “reform[ing] the PAYE terms to ensure that program benefits are targeted to the neediest borrowers.” The proposed “reforms” are a response to criticism arguing that existing forgiveness provisions permit already expensive schools to continue raising tuition with impunity.
Proposed changes include:
- Eliminating the standard payment cap under PAYE;
- Calculating payments for married borrowers filing separately on the combined household Adjusted Gross Income;
- Capping Public Sector Loan Forgiveness (PSLF) at the aggregate loan limit for independent undergraduate students (currently $57,500);
- Establishing a 25-year forgiveness period for borrowers with balances above the aggregate loan limit for independent undergraduate students;
- Preventing payments made under non-income driven repayment plans from being applied toward PSLF;
and
- Capping the amount of interest that can accrue when a borrower’s monthly payment is insufficient to cover the interest.
Find out more here.
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