Gabe Rubin

speaker

468 appearances 13 recordings 1 series first heard Apr 2018 last heard Oct 2023

Gabe Rubin’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · New Student-Debt Plan Would Benefit Lower-Income Borrowers · 12 Jan 2023 podcast

Yeah, so income-driven repayment plans basically calculate your monthly student loan payment based on your income and your family size, which determines how much discretionary income you have and how much you can reasonably be expected to pay on your student loans each month. voice-verified

So under existing rules, borrowers who are enrolled in these plans make payments equivalent to at least 10% of their discretionary income each month. voice-verified

And the new rule proposes cutting that number in half, so 5% of discretionary income on undergraduate loans. voice-verified

And that discretionary income figure is calculated by income above 225% of the poverty line. voice-verified

The program also has a special benefit for people who don't have a lot of money tied up in loans. voice-verified

So it would forgive loan balances for people who are enrolled in income-based plans after 10 years of payments instead of 20 if your loan balance was $12,000 or less to begin with. voice-verified

And this will especially benefit people who are enrolled in programs like an associate's at a community college because those people tend to have lower debt loads and voice-verified

and tend to have lower incomes at least in the 10 years after they finish their program on average. voice-verified

So this only affects the federal student loan program, which is more than 90% of all student loans that are out there. voice-verified

And on top of that, it does not apply to parent plus loans, which are loans taken out by parents who are financing their children's educations. voice-verified

It only applies to the direct loan program. voice-verified

No, it's definitely not new. voice-verified

It was initially created by Congress in 1992, but it hasn't been all that successful. voice-verified

It wasn't really implemented successfully. voice-verified

A government watchdog report last year found that only 157 borrowers out of the roughly 8 million who are enrolled have successfully gotten their debt forgiven. voice-verified

despite keeping up with payments for the term of their plan. voice-verified

So this has been considered a failure by education department officials, and they're really trying to overhaul it to make it work in the long term. voice-verified

But this is by no means a new program starting from scratch. voice-verified

It's definitely a very minuscule number. voice-verified

And it points to the fact that this program has just been riddled with technical problems and has placed a lot of really onerous and burdensome paperwork requirements on the borrowers themselves. voice-verified

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