Senate Proposes New Repayment Plan

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The Senate has introduced a new bill, Repay Act of 2015, which would create a new repayment plan - Simplified Income-Driven Repayment (SIDR).

The good:
  • It's a proposal
  • Only affects NEW borrowers defined as having no Direct or FFELP (Federal Family Education Loan Program) loans or no outstanding balance on a loan made prior to July 1, 2015
  • No proposed changes to Public Service Loan Forgiveness (PSLF)
The bad:
  • A tiered calculation to determine payment:
    • 10% of the portion of discretionary income that is less than $25,000 (discretional income is still defined as AGI less 150% of the poverty line based on household size)
    • plus 15% of remaining discretionary income
  • A 25-year repayment period if more than $57,500 borrowed
  • All household AGI considered regardless of tax filing status (Married Filing Jointly vs. Married Filing Separately)
  • All accrued interest capitalized if you no longer qualify, you opt out, or forget to annually re-apply
  • Any remaining balance forgiveness is considered taxable income
Here's a link to the proposal: http://www.king.senate.gov/download/?id=9CD8B23D-0FF8-4880-A656-4C7767EE4FA7&inline=file
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