As limits on borrowing were increased and college costs were rising, many students were having trouble repaying loans through the standard repayment plan.
The 1993 Omnibus Budget Reconciliation Act formally called for a phasing-in of the Direct Loan Program to begin in 1994. It also established Income-Contingent Repayment, Extended Repayment Plan, and Graduated Repayment Plan for Direct Loan Borrowers.
The Income-Sensitive Repayment Plan for FFEL borrowers was established, allowing FFEL borrowers to be eligible for extended and graduated plans.
The Higher Education Reconciliation Act allowed for professional and graduate students to borrow through the PLUS program.
The Emergency Appropriations Act repealed the single holder rule, allowing borrowers to consolidate loans between lenders.
The College Cost Reduction and Access Act (CCRAA) established the Income-Based Repayment Plan.
The Higher Education Opportunity Act (HEOA) mandated that cohort default rates be calculated to include students in default three years after entering repayment and that the U.S. Department of Education publish those rates. The Ensuring Continued Access to Student Loans Act (ECASLA) temporarily authorized the U.S. Education Department to buy loans from private lenders to ensure students had access to capital during the financial downturn.
The Health Care and Education Reconciliation Act (HCERA) repealed the FFEL programs so that all new federal student loans–except for Perkins Loans—would be made directly from the government to students, saving administrative costs. The terms of the IBR are revised by Congress to lower the payment cap and forgive loans five years sooner than previously for a limited subset of students (those taking out their first loans after July 1, 2014).
The Obama Administration created the Pay As You Earn (PAYE) plan via executive order, extending more generous IBR terms to a larger group of borrowers. The Budget Control Act eliminated subsidized loans for graduate students.
The Obama Administration, via executive order, expanded the PAYE plan to individuals outside of the original 2011 scope to all borrowers with direct loans.