Only 32 student loan borrowers – ever – have qualified for full forgiveness through an income-driven repayment plan

Elizabeth Warren
‘Our student loan system is broken,’ Sen. Elizabeth Warren, who supports student loan forgiveness, wrote in a tweet. ‘Income-based repayment is supposed to offer relief – but only 32 people’s loans have been forgiven by the program. Not 32,000. Just 32.’ Drew Angerer/Getty Images
  • The first federal income-driven repayment plan was created in 1995 and has since enrolled millions of student loan borrowers in the programs.
  • But only 32 people have ever qualified for full student debt forgiveness through federal repayment plans.
  • The report comes as House Democrats passed a stim bill provision that student debt forgiven through 2025 won’t be taxed.
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Only 32 borrowers have ever qualified for full student loan forgiveness in federal income-driven repayment programs, according to a study by the National Consumer Law Center released Monday.

The first income-driven repayment (IDR) plan – then known as income-contingent repayment – was introduced in 1995, giving student loan borrowers the option to set their monthly payments based on their income.

Over the years, other IDR plans emerged – all of which serve a similar purpose in setting a “borrower’s monthly payment based on a portion of the borrower’s income and cancel any remaining loan balance after 20 to 25 years of payments” according to the NCLC report.

Over eight million borrowers are currently enrolled in the repayment programs, and two million people have been in repayment for over 20 years, citing the policy brief. But in the more-than-25-year existence of the federal repayment programs, only 32 people were ever eligible for full student debt cancellation.

“Cancellation was designed to ensure that low-income borrowers are able to eventually get out from under the burden of unaffordable debt and insulate them from the harmful financial effects of this ‘negative amortization’ – ensuring that federal student loans did not turn into the type of debt trap commonly associated with payday loans and predatory subprime mortgages,” the study read.

“If this structure worked as intended when first authorized more than two decades ago, low-income borrowers would routinely see their debts cancelled under IDR today.”

The policy brief by the NCLC comes as Democrats included a provision allowing an exemption on all student-loan forgiveness from taxation through the end of 2025 as part of the $US1.9 ($2) trillion stimulus bill that the House signed on Wednesday.

The provision in the upcoming stimulus bill came as Biden extended student loan forbearance through September. The president also expressed support in forgiving $US10,000 ($12,975) in student loan debt, but Democrats are increasing pressure on him to cancel $US50,000 ($64,876) per borrower.

The stimulus provision was included by Sen. Bob Menendez of New Jersey and Sen. Elizabeth Warren of Massachusetts, who previously ran a presidential campaign on the platform of student debt forgiveness. Warren shared an article by Inside Higher Ed about the NCLC report on Twitter Wednesday.

“Our student loan system is broken,” Warren wrote in the tweet. “Income-based repayment is supposed to offer relief – but only 32 people’s loans have been forgiven by the program. Not 32,000. Just 32.”

“We need to stop blaming student borrowers for this mess and #CancelStudentDebt now,” she wrote.