STEVE INSKEEP, HOST:
The U.S. says this time it really will help millions of student loan borrowers it was supposed to help before, people who have income-driven student loan payments. The news from the Department of Education comes after years of complaints and lawsuits and exclusive NPR reporting. In a call with reporters yesterday, one Education Department official called the program's problems inexcusable. NPR's Cory Turner exposed some of those problems and joined us earlier to describe how the program is supposed to work.
CORY TURNER, BYLINE: These IDR plans were supposed to make sure borrowers can afford their monthly payments by tying them to income and also to family size. And so folks who don't earn a lot can actually have a $0 qualifying monthly payment. So IDR came with this big promise, too. This was the other big thing about this program that attracted a lot of people. After 20 to 25 years, the federal government said it would erase whatever debts are left. But over the years, it's become pretty clear that IDR is a mess. Borrowers often ended up in costly long-term forbearances instead of IDR, which was the fault of both loan servicers and the Education Department. NPR also revealed a host of other really serious problems. Some servicers weren't tracking borrowers' progress toward loan forgiveness. People making those $0 payments might not have been getting credit toward loan forgiveness. And overall, the record keeping in the program was pretty awful.
INSKEEP: Just so I understand, $0 payment means you put in no money, but you get credit as if you did because you have low income right now. That's what that is?
TURNER: Yeah. And you get credit towards loan forgiveness after 20 to 25 years. It's considered a qualifying payment.
INSKEEP: OK. So it was supposed to be. That wasn't working. So what is the Education Department doing differently?
TURNER: Yeah. So first, for folks who spent more than 12 months straight or more than 36 months total in one of these forbearances, that time is now going to count toward loan forgiveness. The department estimates at least 3.5 million borrowers are going to get at least three years of new credit through that fix alone. It's also saying that any months in which borrowers made payments are going to count toward IDR regardless of the repayment plan they were in. The department even says it's going to start tracking borrowers' progress toward forgiveness itself instead of just leaving it up to the servicers. In all, the department says these changes should help more than 40,000 borrowers become immediately eligible for debt cancellation and that it's going to bring millions more closer to eventual debt cancellation.
TURNER: I spoke with Persis Yu, who has done a lot to call attention to IDR's failure. She's now at the Student Borrower Protection Center.
PERSIS YU: I am concerned that this fix actually reaches all of the borrowers. But certainly it has the potential to really be huge for remedying many of the problems that has plagued IDR over the last several decades.
INSKEEP: Cory, I'm just thinking, if there are millions of people potentially affected, some of them are listening now. What do they need to do?
TURNER: Yeah - so for most borrowers, nothing. The department says it will review and update their records automatically over several months. But this is important, Steve. It's not going to be able to make these changes until the fall. And that's because the department's antiquated internal data system actually needs an upgrade first. So there is one category of borrowers, at least, who can do something for folks who were put into forbearance. In short term - so not enough time to qualify, technically - they can request an account review by filing a complaint with the Ombudsmen at the Office of Federal Student Aid (ph). But everyone else, don't call your loan servicer. Just be patient.
INSKEEP: Cory, thanks for your reporting.
TURNER: You're welcome, Steve.
INSKEEP: That's NPR's Cory Turner.
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