Much of the policy debate emerging from concerns over student debt focuses on the structure and operation of Income-Driven Repayment plans. As the number of available IDR plans and the share of borrowers enrolling in these plans have increased, the system has become more confusing and difficult to navigate. The current problems with the IDR system are not an indictment of the basic approach but are signs of problematic design details and implementation failures.
A new report from the Urban Institute suggests recommendations for change. Among them:
*Creating one income-driven federal student loan repayment plan into which borrowers are automatically enrolled, with clear options for making larger payments to cover interest payments or to pay off the debt more quickly.
*Raising the income threshold at which borrowers must make payments to 200 percent of the federal poverty level. This would help low-income borrowers more than lowering the assessment rate, which is the share of income a borrower must pay.
*Forgiving remaining balances for borrowers whose incomes do not support retirement of their debts.