The Plan for Fair Loan Payments

Today, most four-year college students have to borrow to cover rising costs: two out of every three graduating seniors now have student loans. As their debt hits record levels, the rules that are supposed to protect student borrowers instead leave millions facing unaffordable payments and decades of debt. These debt burdens can harm families and threaten our nation's competitiveness in the global economy.

The current system of student-loan borrower protections is inadequate, inconsistent, and inaccessible. Fixing this broken system is critical to ensure that more students pursue a college education, and that they can afford to become teachers, social workers, nurses, and other public service professionals after graduation. Borrowers also need fair and manageable loan payments to be able to save for retirement, buy a home, support a family, or start a small business.

1. Limit student loan payments to a reasonable percentage of income.
2. Recognize that family size affects how much income is available for loan payments.
3. Protect borrowers from high interest charges when they face hardship situations.
4. Cancel remaining debts when borrowers have made regular payments for 20 years.
5. Provide borrowers in both the Direct Loan and the Federal Family Education Loan programs with easy access to all repayment options and protections.

These goals are supported by thousands of students, higher education leaders, loan industry representatives, civil rights groups, Republicans and Democrats in Congress, organizations of parents, college counselors, and others.

One current proposal that meets the Plan’s core goals is the “Fair Payment Assurance” program. It is part of the Student Debt Relief Act of 2007 (S. 359), introduced in the Senate on January 22, 2007. TThis proposal parallels many of the regulatory recommendations that Plan supporters made to the Department of Education in 2006. As new policy proposals emerge, the Project on Student Debt will continue to provide updates, analyses, and opportunities to advance the goals of the Plan for Fair Loan Payments.