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New Report on Income-Based Repayment
October 16, 2012

Upcoming changes to income-based repayment for student loans will benefit graduate students with high debt and high salaries, according to a new report from the New America Foundation. The report, "Safety Net or Windfall?", argues that changes to the income-based repayment system, which will lower monthly payments to 10 percent of a borrower's income (down from 15 percent) and confer loan forgiveness after 20 years (down from 25 years), will encourage graduate schools to increase tuition because high-debt borrowers might not have to repay all of their loans. Low-income borrowers will see only a modest benefit, write the report's authors, Jason Delisle and Alex Holt of the Federal Education Budget Project. They suggest maintaining the new benefits only for borrowers with income at less than 300 percent of the poverty line.

 

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