Posted on Tuesday, May 6, 2025

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by Outside Contributor

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Republicans in the House of Representatives have proposed a new student loan repayment plan that would allow borrowers to tie loan payments to their incomes and, for those who keep up with their payments, prevent balances from rising over time. But some critics allege that the plan would “trap borrowers in debt for three decades or longer,” according to one commentator. Democrats in Congress have also made “thirty years” of debt a central aspect of their messaging against the new plan.

But these charges are misleading at best. Most borrowers would pay off their loans faster under the Republicans’ proposed Repayment Assistance Plan (RAP) than they would under plans that the Obama and Biden administrations created.

RAP sets borrowers’ payments according to their income. If those payments are not sufficient to cover interest, the government waives unpaid interest and credits the borrower’s principal balance up to $50 per month. This ensures that borrowers who keep up with their payments pay down their debts over time.

Contrast this with income-driven plans created under the Obama and Biden administrations. The Obama administration’s PAYE plan offers no principal credit and only limited waivers of unpaid interest; instead, it forgives remaining balances after 20 years of payments. This plan typically results in rising balances over time. The Biden administration’s SAVE plan does waive unpaid interest, but its exceedingly low payments (most borrowers pay $0 every month) and lack of a principal credit mean few borrowers pay down their debts. Again, remaining balances are forgiven after 20 or 25 years.

This forgiveness-driven approach proved unpopular in practice. Borrowers raged over rising balances, while many wondered whether they would actually get forgiveness due to the government’s failure to properly count qualifying payments. Learning from the failures of PAYE and SAVE, Republicans’ RAP takes a different approach. By frontloading assistance—borrowers get help paying down principal immediately, rather than waiting around for forgiveness—it aims to help borrowers retire their debts faster.

In most cases, borrowers pay off their loans faster under RAP than they do under PAYE or SAVE. A typical college graduate with $30,000 in debt and a $45,000 starting salary will pay off her loans in full in just over 10 years under RAP. The same borrower would take 13 years to pay off her loans under the Obama administration’s PAYE plan. Under SAVE, she would not pay off her debts at all, but receive forgiveness after 20 years.

SSOther types of borrowers also pay off their debts faster under RAP than existing plans. If the goal is to offer a repayment plan where payments are sensitive to income, but borrowers also pay off their loans quickly, RAP has a clear advantage over other plans.

So where does the “30 year” talking point come in? RAP discharges any debt balance that remains after 30 years. Opponents of the plan have compared it to PAYE and SAVE along this dimension alone—while ignoring RAP’s other benefits, which generally ensure borrowers pay down loans faster than they do on other plans.

Why include the 30-year provision at all, then? Frontloading repayment assistance costs money; RAP needs to offset the costs somewhere else. Around 2 percent of borrowers owe more than $200,000, but these account for almost 20 percent of outstanding balances in the student loan portfolio. The costs of waiving interest for these loans are enormous, so an extended repayment timeline is necessary to make the budget math work. Even so, many borrowers with very high debts will still pay off their loans before they reach the 30-year mark.

Misleading talking points about “trapping borrowers in debt for three decades” belie the fact that, in most cases, borrowers will retire their loans faster under RAP than other income-driven repayment options. Rather than forcing borrowers to wait 20 to 25 years for loan forgiveness, RAP will empower them to pay off their student debt and move on with their lives as quickly as possible.

Preston Cooper is a senior fellow at the American Enterprise Institute (AEI), where his work focuses on higher education ROI, student loans, and higher education reform. Before joining AEI in his current role, Dr. Cooper was a senior fellow in higher education policy at the Foundation for Research on Equal Opportunity, a research analyst at the American Enterprise Institute, and a policy analyst at the Manhattan Institute for Policy Research. His work has appeared in the popular press, including in the Wall Street Journal, the Washington Post, Forbes, Fortune, RealClearPolicy, and National Review. Dr. Cooper has a PhD from George Mason University and a bachelor’s degree from Swarthmore College.

Reprinted with permission from AEI.org by Preston Cooper.

The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.