Senator Edward M. Kennedy Touts Income Based Repayment Program

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Senator Edward M. Kennedy sent a letter today to Massachusetts college leaders, urging them to make sure students know about a new program that makes it less expensive to repay student loans.

Under the program that starts Wednesday, monthly payments are capped based on a graduate's income and remaining balances are wiped clean after 25 years. Those who take public service jobs can get their loans forgiven after 10 years.

"A college degree has never been more important. Yet it’s increasingly difficult for students to afford. In particular, the prospect of heavy loan burdens is discouraging more and more students from attending the college of their choice, or pursuing jobs in the public interest. More than two-thirds of college students graduate with federal loan debt averaging $20,000 after graduation," wrote Kennedy, chairman of the Health, Education, Labor, and Pensions Committee .

"College affordability has long been a major concern of mine in the Senate and I’m writing now to draw your attention to a new option – Income Based Repayment – that will make loan repayment easier for students, no matter what job they take after graduation. If you haven’t done so already, I urge you to inform your students about it."

His full letter is below:
June 30, 2009

Dear College President:

A college degree has never been more important. Yet it’s increasingly difficult for students to afford. In particular, the prospect of heavy loan burdens is discouraging more and more students from attending the college of their choice, or pursuing jobs in the public interest. More than two-thirds of college students graduate with federal loan debt averaging $20,000 after graduation.

College affordability has long been a major concern of mine in the Senate and I’m writing now to draw your attention to a new option – Income Based Repayment – that will make loan repayment easier for students, no matter what job they take after graduation. If you haven’t done so already, I urge you to inform your students about it.

Income Based Repayment, or IBR, becomes available on July 1. It was created by the College Cost Reduction and Access Act of 2007, and its goal is to keep all career options open to college graduates by preventing payments on federal student loans from exceeding 15 percent of a borrower’s disposable income. IBR borrowers can also have their loans forgiven after 25 years of repayment, or after 10 years in a public service career.

The Department of Education provides more information about IBR, including an easy-to-use IBR Calculator that estimates monthly payments under the program, on its student aid website, http://studentaid.ed.gov/.

To apply for IBR, current borrowers should contact the lender or lenders who hold their student loans. Attached is additional information about the program.

Please contact my office if you have any questions. I’m hopeful that this new option will make college more affordable for more students, and college graduates’ employment decisions will not be dictated by the terms of their student loans.

With respect and appreciation, and I commend you for all you’re doing to put students on paths to lifetime success.

Sincerely,

Edward M. Kennedy