Dear Secretary Duncan:
We write regarding the negotiated rulemaking process for changes to the Pay as You Earn (PAYE) program. At a time when outstanding federal student loan debt exceeds one trillion dollars, this essential program keeps payment levels affordable and manageable for millions of Americans. We share your goals of expanding eligibility for PAYE and applaud your efforts to improve the customer service and support to the 41 million Americans with federal student loan debt. However, we have significant concerns about the Department’s draft proposal, which was recently presented to the negotiated rulemaking committee. The draft proposal would add unnecessary complexity, increase costs for responsible low- and middle-income borrowers, and result in the disparate treatment of graduate and undergraduate borrowers.
The Department already offers four separate income-driven student loan repayment plans with varying eligibility requirements, costs, and benefits. Instead of expanding PAYE, the draft proposal would add a fifth option, called the Revised Pay As You Earn (REPAYE) plan, to the existing maze of programs. The proposed program includes new regulations that would extend repayment periods by as long as five years for any student with graduate debt, potentially costing those borrowers thousands of dollars in additional payments. The federal government should be making it easier for students to pursue their dreams after graduation, not saddling them with additional cost and anxiety.
The Direct Loan program continues to generate significant revenue for the federal government, estimated to total $89 billion over the next ten years. Whatever changes the Department makes to income-driven repayment options, the government will undoubtedly continue to generate revenue from borrowers struggling to repay their student loan debt. The Department can and should channel a substantial portion of these revenues to expanding and improving the existing PAYE plan. The goal should be to help as many borrowers as possible, not to maximize government revenue.
When President Obama announced his intention to make student loans more affordable last year, he spoke of the need to simplify repayments for students with loans too old to qualify under the current PAYE rules. These sentiments have been echoed by students and advocates who have since weighed in on this issue. The arbitrary eligibility limits under PAYE make little sense, and we hoped the President’s announcement would lead the Department to improve the current program. Instead, the current draft proposal presents unnecessary eligibility restrictions that would make loan repayment even more challenging for graduate student borrowers. We urge you to support simple and straightforward action to extend the existing PAYE plan to cover additional borrowers.
