In 2007, Congress passed legislation which promised to transform our student loan system and provide far wider access to higher education: the College Cost Reduction and Access Act. One of the bill’s central elements is the Income Based Repayment program.
IBR is for teachers, non-profit employees and government workers. After 10 years of employment and regular payment, they will be eligible for payments of no more than 10 percent of their income. The debt is forgiven after 25 years.
There are two ways IBR can and should be tweaked to be more humane and provide far greater debt relief to those seeking higher education:
1. Any lowering of the 10 year “employment and regular payment” would be a step in the right direction.
Even if IBR maintained the 10 years of payment, they should cut down the time limit on work. This is 2010, who expects to stay in one sector for 10 years? “It takes money, but we’ve got to get relief coming sooner than 10 years,” says Scott Seibring, director of financial aid at Wesleyan University. “It sounds great in theory to convert a loan into a grant, but that’s 25 years out.”
2. The money saved should not be considered taxable.
“It’s a bit of a shell game the government is playing,” says Robert Applebaum, founder of the advocacy group, Forgive Student Loan Debt to Stimulate the Economy. “They’re taking back a big chunk of the money that is intended to relieve low income students.”