Repay Act of 2021
This bill directs the Department of Education (ED) to carry out a simplified income-driven repayment program for new borrowers of Federal Direct Loans. New borrower refers to a borrower who, as of July 1, 2022, has no outstanding balance on Federal Direct Loans.
Under current law, a borrower may choose from three traditional repayment plans, including a fixed 10-year repayment plan, and five income-driven plans. Under the bill, a new borrower may choose either the fixed 10-year repayment plan or a simplified income-driven repayment plan. ED must direct servicers of loans to notify borrowers of these repayment options. ED must cancel the outstanding loan balance after a borrower makes payments under the simplified income-driven repayment plan for 20 or 25 years, depending on the balance of the loan at the time the initial repayment period began.
Further, the bill allows payments made by a borrower under the simplified income-driven repayment plan to become qualifying payments under the Public Service Loan Forgiveness program.
Finally, the Government Accountability Office must study and provide recommendations for streamlining income and employment verification and administering income-based repayment programs.