Dive Brief: 

• The American Council on Education led a group of 30 higher education organizations last week in commending regulatory proposals to revamp income-driven repayment plans but urging the Biden administration to work with Congress to review the entire student loan system. 
• The U.S. Department of Education debuted draft regulations in January that would make large changes to income-driven repayment plans, which allow borrowers to have their loans forgiven after they make a certain number of qualifying payments based on their income. The proposals — which are expected to vastly increase the number of people eligible for the programs and reduce their monthly payments — drew more than 13,000 public comments. 
• The proposal includes elements that are “important and long overdue,” ACE President Ted Mitchell wrote in a public comment on behalf of the 30 organizations. However, a more effective way to deal with pervasive issues with federal student loans would be a “comprehensive effort to review the entirety of our lending and repayment system,” Mitchell wrote. 

Dive Insight: 

The groups signing onto Mitchell's comments include prominent organizations representing different corners of higher ed, such as the Association of Public and Land-grant Universities, Career Education Colleges and Universities, the Council of Independent Colleges and the State Higher Education Executive Officers Association. 

They are calling on the Biden administration to carry out a long overdue rewrite of the Higher Education Act, the federal law governing federal financial aid programs. It hasn’t been updated since 2008 and higher education experts have expressed doubts that a divided Congress can come together to make comprehensive changes to the law. 

“In the absence of legislative action, we understand that the Department believes it must use its regulatory powers to help student borrowers repay their loans and to correct the burdensome and needlessly complicated repayment system,” Mitchell wrote in the comment. 

The Education Department proposed major policy changes to the income-driven repayment system, including slashing payments from 10% to 5% of borrowers’ discretionary income. It would also raise the income threshold for borrowers who don’t have to make monthly payments, from about $20,400 for individuals to $30,600. 

Moreover, the time borrowers must make payments would be reduced from 20 years to only 10 years if they owed $12,000 or less. For each $1,000 more they borrow, an additional year would be tacked on. 

Prominent Republican lawmakers have pushed back against the proposals. Sen. Bill Cassidy, from Louisiana, and Rep. Virginia Foxx, from North Carolina, led a group of more than five dozen lawmakers in calling on the Biden administration to scrap their proposed changes due to its estimated cost. 

In late January, the Penn Wharton Budget Model predicted that the plan would cost up to $361 billion over the next decade. 

In a letter to Education Secretary Miguel Cardona, the conservative lawmakers argued the draft regulation “would turn a safety-net for low-income federal student loan borrowers into an unsustainable transfer of wealth from hardworking taxpayers to college-educated individuals.”

However, the higher education groups voiced support for some of the Biden administration’s proposals, such as the shortened repayment period and raising the income ceiling for borrowers who don’t have to make payments. They also applauded provisions that would automatically enroll borrowers in income-driven repayment plans and eliminate their unpaid interest each month. 

But they called for a comprehensive rewrite of the Higher Education Act. 

“This would be the most effective way to address problems with loan repayment policies in a holistic way,” Mitchell wrote. “We encourage the Department to work with Congress toward this end.” 

The letter also said the groups hope Congress will incorporate some of the proposed changes to income-driven repayment plans into federal law. 

“We will remain supportive of ways to ease the repayment burden on students and hope to see a solution that will allow for more consistency across repayment plans for all borrowers,” Mitchell wrote.