Loan breach

A new student-loan payback plan would hurt

The Trump administration is reportedly considering a plan to simplify studentloan repayment that could be a breach of faith with some borrowers, if they are not allowed to keep their existing payment plans.

The Washington Post reports it has budget documents that propose replacing the five existing income driven repayment plans with just one. If adopted by Congress, the new plan would require borrowers to pay 12.5 percent of their income, more than some current plans require. Borrowers with only undergraduate loans would be released from anything left of their debt after 15 years, five years sooner than they could be now. But those who took student loans for advanced degrees would have to keep paying for 30 years, an increase of as many as 10 years.

Slated for elimination would be the Public Service Loan Forgiveness program, which lets borrowers out of their debt after 10 years’ worth of payments if they work in government or for certain nonprofits. A report from Inside Higher Ed, citing an anonymous source, says existing borrowers would still be allowed to get PSLF, but it says nothing about whether existing borrowers who aren’t in public service would be able to keep their plans.

They should be. For Americans who have gone on income-driven repayment or taken out student loans while planning to use it, their payment plans are part of their contract with the government.

For some of them — those who took out the loans knowing the income-driven plans existed — these plans were always the real basis of their promise to pay. The deal wasn’t for a fixed amount of principal plus interest, as with an ordinary loan; it was for a percentage of income over a known number of years. Even those who originally planned to pay the principal plus interest may now be relying on the payment plans. They’ve accepted a revised deal.

Those who’ve worked in public service, taking lower pay on the promise of early loan forgiveness, have an even clearer right to have the government keep its side of the bargain.