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

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Lauren Frias
·3 min read
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Elizabeth Warren
"Our student loan system is broken," Sen. Elizabeth Warren tweeted on Wednesday. "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
  • Federal income-driven repayment plans, created in 1995, have enrolled millions of student-loan borrowers.

  • But only 32 people have ever received debt cancellation through the plans, a new report says.

  • House Democrats recently passed a provision not to tax student debt forgiven through 2025.

  • See more stories on Insider's business page.

Only 32 student-loan borrowers have ever received cancellation through federal income-driven repayment programs, the National Consumer Law Center said in a report on Monday.

The first income-driven repayment plan, then known as income-contingent repayment, was introduced in 1995, giving 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, to "set the 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," the NCLC report said.

Over 8 million borrowers are enrolled in the repayment programs, and 2 million people have been in repayment for over 20 years, the report said. But in the programs' 25-year existence, only 32 people have ever had their student debt canceled, the NCLC said.

"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 report said.

It added that "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."

Democrats included a provision in the $1.9 trillion stimulus bill that the House passed on Wednesday exempting student-loan forgiveness from taxation through the end of 2025.

President Joe Biden has extended student-loan forbearance through September and expressed support for forgiving $10,000 worth of student-loan debt for borrowers, though Democrats have pressured him to cancel $50,000 worth of debt per borrower.

The stimulus provision was included by Sens. Bob Menendez of New Jersey and Elizabeth Warren of Massachusetts, who ran as a 2020 Democratic presidential candidate on a platform of student-debt forgiveness.

Warren shared an Inside Higher Ed article about the NCLC report on Twitter on Wednesday. "Our student loan system is broken," Warren wrote. "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 added.

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