Take Action for Fair Loan Payments!
There are two serious problems with the proposed regulations, and I am asking you to fix them so that borrowers can access important new student loan benefits as Congress intended.
The first problem involves the way borrowers are treated in the Income-Based Repayment program (IBR) when they are married and their spouse also has student loans. IBR was designed to limit student loan payments to an affordable level. The proposed rules would saddle most married borrowers with unaffordable IBR payments - as much as double what unmarried borrowers in otherwise identical situations would pay. That is because under these rules, payments would be calculated based on both spouses' incomes, but only one spouse's debt. In reality, that combined income has to support both spouses and cover both of their student loan obligations.
The resulting double-counting penalty puts married borrowers in a terrible bind. If they file their taxes jointly, as the vast majority of married couples do, they could have to devote as much as 30 percent of their available income to student loan payments, even though IBR is supposed to set that cap at 15 percent. The only alternative is to file taxes separately, which would force couples to give up many valuable tax credits and deductions just to get a fair IBR payment. The resulting penalty can be greater than any benefit gained through IBR. Please fix this problem so that married borrowers have access to the same IBR benefits as everyone else: student debt should not discourage people from getting married.
The second problem is with the proposed rules for Public Service Loan Forgiveness, which would leave borrowers completely in the dark about whether and when they will qualify for forgiveness. This program is supposed to encourage people to serve their country and community in government and nonprofit jobs. Borrowers need to know if their time in a particular job will count towards the required 10 years of public service before they can make informed career and financial decisions. The proposed rules would require borrowers to fully document 10 or more years of employment history after the fact, submit all that documentation to the Department, and simply hope for the best. Please fix this problem by developing a system that lets borrowers confirm and track their eligibility for this form of loan forgiveness, so that they have a clear incentive to enter and continue in public service, and a sense of security while doing such important work.
Finally, I would like to state my support for the Project on Student Debt's official comments on the proposed rules, and to thank the Department for its efforts to make sure that these new programs really work for student loan borrowers.