Only 32 federal student-loan borrowers have received forgiveness through income-driven repayment.
The Student Borrower Protection Center called on President Joe Biden to reform the program.
It suggested a waiver to allow past payments to count toward forgiveness.
Only 32 federal student-loan borrowers have received forgiveness out of 4.4 million who have been paying off their debt for more than 20 years through a program that calculates monthly payments based on income.
Advocates say that the income-driven repayment program has failed and that President Joe Biden has the power to fix it.
Income-driven repayment plans create a monthly student-loan payment plan based on a borrower's income and family size. To qualify for one of the plans, borrowers must submit tax documentation each year to prove that the payments they would be making under the income-based plan are less than payments under a standard repayment plan.
But while the program was designed to cancel remaining debt balances for borrowers in repayment after 20 to 25 years, only 32 borrowers — ever — have had their loans forgiven, the National Consumer Law Center said in a report in March. That's why the Student Borrower Protection Center, along with the Center for Responsible Lending and the National Consumer Law Center, devised recommendations to ensure the program works as intended.
"Millions of student loan borrowers are buckling under the weight of a broken system," Persis Yu, a policy director and managing counsel at the Student Borrower Protection Center, said in a statement on Wednesday. "The failures of income-driven repayment have kept borrowers in unaffordable debt for decades too long. It is time for the Biden Administration to do its part and fulfill the promise of IDR by giving borrowers the credit they deserve."
The organizations' report said Education Department data indicated that 4.4 million borrowers have been in repayment under IDR for 20 years or longer. It said complexities in the program, like burdensome paperwork and deceptive practices by loan companies, had kept borrowers stuck in repayment.
To remedy those failures, they recommended Biden implement an IDR waiver that would do three things:
Retroactively count all months since the borrowers entered repayment toward forgiveness.
Provide relief automatically, so the borrower would not have to submit additional paperwork.
Apply the waiver to all borrowers who could have qualified for IDR but did not consolidate their loans into the program.
The report noted that this waiver request is similar to changes Biden made last year to the Public Service Loan Forgiveness program, which is supposed to forgive student debt for public servants after 10 years of qualifying payments but ran up a 98% denial rate.
Biden promised during his campaign to fix both the forgiveness program and the IDR program. In October he announced temporary reforms for the forgiveness program, including a waiver that would allow past payments in any federal program to count toward forgiveness. The IDR waiver the organizations proposed adopts the same model.
The Biden administration has already taken some steps to ease the process for borrowers hoping to enroll in IDR. Insider reported last month that Federal Student Aid had revised some documentation requirements, including allowing borrowers to self-report their income to apply for IDR or recertify through July 31, rather than submit any tax paperwork.
But earlier this month, after he extended the pause on student-loan payments to May, Biden said in a statement that federal borrowers should "do their part" to prepare for the resumption of payments, including looking at options to lower their monthly payments through IDR. The advocacy organizations say reforms to the program are needed for that to be a viable option.
Read the original article on Business Insider