UPDATE: Department of Education publishes income-driven student loan repayment rules

'[A]ny individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than about $62,400' will have a monthly payment of $0.

The announcement to restructure IDR payments came in conjunction with the White House’s plan to forgive student loan debt, which Campus Reform previously covered.

Today, the US Department of Education (DOEd) officially published regulations to transform the income-driven student loan repayment system (IDR).

In a press release published on Tuesday, the DOEd announced new proposed regulations to amend the IDR program for undergraduate borrowers.

The new IDR system increases the federal poverty limit from 150% to 225% of the poverty level, Forbes reports.

According to the DOEd, this means that “any individual borrower who makes less than roughly $30,600 annually and any borrower in a family of four who makes less than about $62,400” will have a monthly payment of $0.

The regulations also cut undergraduate borrowers’ payments from 10% to 5% of their discretionary income. As a result, an average graduate of a 4-year institution would save close to $2,000 per year compared to the current IDR system, and approximately 85% of community college borrowers would be debt-free within 10 years, according to DOEd estimates.

The announcement to restructure IDR payments came in conjunction with the White House’s plan to forgive student loan debt, which Campus Reform previously covered

RELATED:  PROF. GIORDANO: Student Loan Forgiveness, HEROES Act: How President Biden Undermines His Own Argument

Although this was announced in August 2022, publishing the regulations in the Federal Register is the first legal step to execute the Biden-Harris Administration’s plan with respect to IDR.

The Biden Administration’s student loan forgiveness plan, which forgives up to $20,000 in student loans for qualified borrowers, has been deemed unconstitutional by judges as executive regulation is effectively taking the place of Congress’s legislative authority.

In November 2022, for example, Northern District of Texas Judge Mark Pitman declared the plan unconstitutional, as Campus Reform reported late last year.

Pitman’s opinion contends, “if the executive branch seeks to use that delegated power to create a law of vast economic and political significance, it must have clear congressional authorization.” 

While Pitman’s November 2022 opinion does not explicitly address the IDR restructuring, the plan does have vast economic implications as it cost taxpayers billions. 

RELATED ARTICLE: WATCH: Students don't want to push loan forgiveness on taxpayers 

Since the creation of the IDR system in 1993, it has cost taxpayers $197 billion, according to the US Government Accountability Office.

In August last year, the University of Pennsylvania Wharton School of Business estimated that the IDR restructuring could add another $450 billion to the overall cost of the program.

The rules published in the Federal Register are open to revision based on constituent comments until February 10 this year.

Campus Reform has contacted the DOEd, the White House, the Wharton School of Business, and Judge Pitman for comment.

Campus Reform continues to monitor the implementation of the Biden Administration’s student loan forgiveness plan and update accordingly.

Follow Gabrielle M. Etzel on Twitter.