The plan would have lower monthly payments, an easier path to forgiveness and a promise that unpaid interest will not be added to a borrower’s loan balance.
“Student debt has become a dream killer,” Education Secretary Miguel Cardona said. “This is a promise to the American people that, at long last, we will fix a broken system and make student loans affordable.”
If it’s finalized, the proposal would give a major overhaul to income-driven repayment plans — one of several payment options offered by the federal government. The resulting plan would have lower monthly payments, an easier path to forgiveness and a promise that unpaid interest will not be added to a borrower’s loan balance.
As long as borrowers make their monthly payments, any unpaid interest would not be charged. The change is meant to prevent borrowers from having unpaid interest added to their loan balance, a practice that can cause debt to snowball even as borrowers make payments. Supporters see the proposal as a significant stride toward college affordability. Some say it’s so generous that it approaches free community college — a campaign promise that Biden has pushed but failed to deliver.
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