Trump Replaces Every Income-Driven Student-Loan Plan With One That Bills The Poorest Borrowers $10 A Month For 30 Years, Then Taxes Whatever It Forgives

WASHINGTON. Federal officials confirmed Wednesday that the nation's patchwork of income-driven student-loan repayment plans had been consolidated into a single streamlined option, sparing tens of millions of borrowers the confusion of choosing among programs that had allowed them to finish paying sooner.

Under the Repayment Assistance Plan, which became the only income-based plan available to new borrowers on July 1, Americans will now enjoy a uniform path to loan forgiveness that arrives after just 30 years of continuous payments, a full decade longer than the plans it replaced. Officials noted that the extended timeline ensures no borrower reaches relief before reaching late middle age.

The plan sets monthly payments at 1 to 10 percent of a borrower's income and guarantees that even Americans earning nothing will contribute a minimum of $10 each month, a provision the administration described as restoring dignity to the lowest earners by keeping them active participants in the economy. Borrowers may reduce their bills by $50 for each dependent, an accommodation for the children they will now be repaying loans alongside.

"For too long, the government let struggling borrowers escape their obligations in as little as 20 years, and sometimes tax free," said one official within the administration, who added that the new plan corrects the oversight by treating any balance forgiven after three decades as ordinary income, subject to a tax bill the administration characterized as a celebration of the milestone. Parent PLUS borrowers, meanwhile, were reassured that the new caps and exclusions applied to them would spare their families the temptation to overinvest in their children's education.

The overhaul, contained in the reconciliation law the President signed last summer, is projected to save the federal government hundreds of billions of dollars, money that lawmakers had already spent extending the 2017 tax cuts before the savings were identified. The President has called the measure the most beautiful bill in American history and has repeatedly praised its treatment of student borrowers as the fairest ever devised.

At press time, a 22-year-old borrower had been informed that if all went according to plan, her debt would be forgiven, and taxed, shortly before her 52nd birthday.