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Business and Policy Areas
Business and Policy Areas

ED Advances Plans for New Student Loan Repayment Option

July 30, 2015

The Department of Education has taken the next step toward expanding income-driven repayment for federal student loan borrowers and opportunities for institutions to challenge or appeal their cohort default rates (CDR) and is seeking public comment on the proposed changes through August 10.

The Notice of Proposed Rulemaking (NPRM), released in mid-July, includes text for the package of issues subjected to negotiated rulemaking in spring 2015. Negotiators reached consensus on the entire package, binding ED to the agreed-upon language during negotiations for the NPRM.

  • Revised Pay As You Earn (REPAYE). Following a mandate by President Obama to expand Pay As You Earn (PAYE), ED proposed creating a new income-contingent repayment plan, now known as REPAYE. The NPRM provides that all Direct Loan student borrowers would be eligible for REPAYE and would qualify based on income and family size. Time to forgiveness would be tiered based on whether a borrower had only undergraduate loans (20 years of qualifying payments) or borrowed for graduate study, as well (25 years).
  • Participation Rate Index (PRI) challenges and appeals. An institution with a low PRI may be eligible to avoid consequences for a high draft or final CDR. The NPRM would allow schools with CDRs between 30 and 40 percent in any of the three most recently calculated fiscal years to submit a timely challenge or appeal based on their PRI. In some circumstances, institutions with CDRs in that range will not lose provisional certification if they appeal or challenge in a timely fashion and have a PRI of .0625 or below. Institutions that are successful in challenging their draft CDRs will be exempt from provisional certification or a loss of eligibility if, when the official CDR is released, it is less than or equal to the draft rate.

The NPRM also includes proposed changes specific to certain borrowers, including service members and those transitioning from loan rehabilitation.

NACUBO encourages members to contact ED with feedback on the proposed changes.


Anne Gross
Vice President, Regulatory Affairs

Bryan Dickson
Senior Policy Analyst