The sad and sorry saga of income based repayment (IBR) continues. In the Chronicle of Higher Education, Jason Delisle and Alex Holt document the latest scandal, excerpts here:
“One of the nation’s leading law schools is exploiting a huge loophole in federal financial-aid law, and taxpayers are clearly on the losing side. If other schools catch on, the result could be an undeserved bonanza for wealthy lawyers and expensive law schools even as other federal-aid programs, like Pell Grants, face looming budget cliffs.
In 2006 and 2007 the federal government created two separate programs that, when combined, created the loophole: Grad PLUS loans and income-based repayment for student loans. Under the Grad PLUS program, graduate and professional students can borrow to pay for the entire cost of their education, including living expenses, at just about any college and at whatever price the institution sets. [Income-based repayment] caps recent and future students’ payments on those loans … and forgives any remaining debt after 10 years for those working in virtually any government or nonprofit job…
When schools and students strategically combine [Grad Plus loans and IBR], like ammonium nitrate fertilizer and gasoline, the result can be explosive. So powerful, in fact, Georgetown Law claims on its Web site that certain students enrolled in its Loan Repayment Assistance Program ‘might not pay a single penny on their loans—ever!’ …
… Neither Georgetown nor its students are financing the program. The taxpayer is, by providing them with access to unlimited loans and unlimited loan forgiveness.”
IBR is a blank check for law schools. For the rest of us, IBR is a series of bad choices that will have long lasting consequences, causing pain and discomfort far into the future. In other words, income based repayment (IBR) is the herpes of federal financial aid.
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