Third Way Statement on New Proposed Student Loan Repayment Regulations
WASHINGTON — Third Way released the following statement from Lanae Erickson, Senior Vice President for Social Policy, Education & Politics:
“The proposed changes to the income-driven repayment program announced today by the US Department of Education address several of the biggest pain points experienced by distressed student loan borrowers: unaffordable monthly payments, balances growing even while they are making payments, and a long horizon to eventual relief for those who have dutifully followed all the rules and paid responsibly for decades. We know that the borrowers who are most likely to struggle with repayment are those who did not complete a degree, and they hold lower than average amounts of debt. To that end, we are heartened to see that these proposed regulations target the greatest help to the borrowers who need it the most: preventing runaway interest for low-income borrowers, automatically moving those at risk of default into income-based repayment, and delivering targeted lower payments to those who sought higher education but ended up with little earnings bump to show for it.
“Yet, significantly more must be done to improve the higher education system by getting to the root of the problem: a reckless lack of accountability for predatory and low-quality institutions that charge too much and deliver too little for students and taxpayers. That is why we are heartened to see the Administration pair these tailored protections for distressed borrowers with a new initiative to identify programs that deliver the least financial return on investment, to warn students against taking out loans to attend those programs, and to push their schools to improve outcomes or shutter the program. To prevent the borrower protections announced today from becoming a band-aid fix that does nothing to solve the problem, or worse, even incentivizes further price hikes and unaffordable debt, federally-funded college programs must be held to basic standards of quality. Major improvements to the student loan system like those announced today are vital, but backend fixes for those who have been harmed by the broken system must be accompanied by upfront guardrails to ensure that future students receive a return on their educational investment.
“In addition to the accountability actions announced today, which demonstrate the Department of Education’s commitment to fixing the system moving forward, we urge the Administration to go further by issuing a new gainful employment rule with an earnings threshold to ensure that taxpayers are no longer on the hook for bailing out poor-performing career education programs. We thank the Biden Administration for this step toward reform to improve student outcomes in higher education and will continue to support additional actions reaffirmed today by the Department of Education to strengthen transparency and accountability across the system and better protect the interests of borrowers and taxpayers.”