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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

Department of Education Releases REPAYE Proposed Rule

July 17, 2015 —The Department of Education July 10 published a notice of proposed rulemaking that includes a revised Pay As You Earn (REPAYE) repayment plan [see Washington Highlights, April 3]. Like other income-driven repayment plans, REPAYE caps borrowers’ monthly payments at 10 percent of discretionary income and provides a maximum repayment duration safety net.

The Department reached consensus agreement with a negotiated rulemaking committee in April, obligating them to use the agreed upon regulatory language. Of particular concern to medical students, REPAYE includes the following new features:

  • If a borrower received any loans as graduate or professional student, the repayment period is 25 years instead of 20 for undergraduates;
  • There is no cap on the monthly payment amount;
  • For unsubsidized loans, including Direct PLUS Loans made to graduate students, the Secretary charges 50 percent of the remaining accrued interest during periods of negative amortization; and
  • For married borrowers filing jointly or separately, the adjusted gross income of both the borrower and the spouse are used to determine whether the borrower has a partial financial hardship and to calculate the monthly payment amount.

REPAYE does not replace current income-driven repayment options, and would be available to borrowers regardless of when they received their Direct Loans. Simplifying the multitude of income-driven repayment plans is expected to be discussed in the upcoming reauthorization of the Higher Education Act.

Senators Sheldon Whitehouse (D-R.I.), Patty Murray (D-Wash.), Ron Wyden (D-Ore.), Jack Reed (D-R.I.), and Tammy Baldwin (D-Wis.) sent a June 16 letter to Secretary of Education Arne Duncan warning that the draft proposal would “add unnecessary complexity, increase costs for responsible low- and middle-income borrowers, and result in the disparate treatment of graduate and undergraduate borrowers.”

Comments on the proposed regulations may be submitted to the Department through the Federal eRulemaking Portal by Aug. 10, 2015.

Contact:

Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116
Email: mshick@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org