Student loan servicers are being called out by a number of Senate Democrats for their “mismanagement” of income-driven repayment programs while a bill has been introduced in the House of Representatives that would change the terms under which a borrower’s payments are calculated based on his or her income, not the terms of the loan.
While 4.4 million individuals with student loans are eligible for IDRs, only 32 have ever had their debts canceled by successfully completing the requirements. Servicers are being accused of failing to properly count qualifying payments and not accurately track the progress of individuals in the program, according to a letter sent to the Consumer Financial Protection Bureau and the Education Department by Sen. Elizabeth Warren [D-Mass.], Sen. Sherrod Brown [D-Ohio] and others. Noting a report that was published last week by NPR on the IDR program, the Senators “urge the CFPB to investigate the report’s findings to ensure servicers implement IDR with fidelity going forward” they wrote in their letter to CFPB Director Rohit Chopra.
At the same time, a bill – H.R. 7530, the Student Loan Borrower Relief Act — was introduced yesterday by Rep. Frederica Wilson [D-Fla.] seeking to update both the IDR and Public Service Loan Forgiveness programs. The bill would lower the period for an IDR to 15 years, from 25, and change the eligibility requirement to those making under 250% of the federal poverty limit, from 150% currently, among other changes. The bill, which has 21 cosponsors, has been referred to the House Committee on Education and Labor for its consideration.