Old IBR lays a 15% rate and New IBR has a 10% rate. Furthermore, the pre 2012 loans don’t qualify for the 1% reduction for being in auto-pay. Is there any good explanation for this other than sheer cruelty?
All of my loans are pre 2012 and I have been paying for decades. By the end of it all I will end up paying over three times the amount I borrowed. So why is Ed penalizing people who have pre 2012 loans?
byu/Automatic-Doubt-4874 inStudentLoans
Posted by Automatic-Doubt-4874
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Pre 2012 loans are mostly what were called FFEL loans, which were loans that were privately held by lenders but guaranteed by the government. The program was ended around that time and replaced with the Direct program where the government directly lended money out. As FFEL loans are privately held, the government has limited powers to change the terms of those loans.
As for the old vs. new IBR terms, those differences are nothing but designed to limit government spending. That distinction shouldn’t exist.