Why Biden's plan to make monthly student-loan payments cheaper could end up sticking borrowers with the same repayment struggles they've had for decades
who previously spoke to Insider
Then, after Angel received their degrees, they enrolled in an income-driven repayment plan, which is intended to give borrowers affordable monthly payments with the promise of loan forgiveness after at least 20 years. But the plans have seldom worked as intended, leading borrowers to pay off their loans for much longer than they signed up for.
. Specifically, it would amend the Revised Pay As You Earn plan, which was created in 2016 to calculate borrowers' monthly payments based on their discretionary income — and if implemented properly, the changes would cut undergraduate monthly payments in half to no more than 5% of discretionary income, down from the current 10%.
Those changes will be especially helpful for borrowers at risk of delinquency and default, Matthew Chingos, vice president of education and data policy at the think-tank Urban Institute, told Insider. But after so many years of failures with IDR plans, Chingos said he's concerned not much will change.
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