The FAIR Act (Federal Assistance to Initiate Repayment Act) is designed to help federal student loan borrowers understand their options and avoid falling behind on payments. Starting immediately, the Department of Education must send borrowers at least 12 notices over the next year explaining when payments restart, what repayment plans are available, and what to do if they're struggling. The law creates a new income-driven repayment plan that caps monthly payments at 10% of income above 150% of the poverty line, making payments more affordable for struggling borrowers. If you use this plan for long enough and make consistent payments, any remaining loan balance gets forgiven—a significant benefit for lower-income borrowers.

The bill also simplifies repayment options by limiting borrowers to two main choices: a standard 10-year plan or the new income-driven plan. If you don't pick one, you're automatically enrolled in the standard plan. The law protects borrowers in default by allowing them to rehabilitate their loans and get back on track. It also requires the Education Department to be transparent by publishing information about how they've notified borrowers and sharing templates of their communications. Additionally, the law ties bonuses for Education Department leaders to whether they actually carry out these notification requirements, ensuring accountability. For borrowers already in income-based or income-contingent repayment plans, the law applies whichever terms are most favorable to them under the new system.

FAIR Act

Owens, Burgess

Federal Assistance to Initiate Repayment Act or the FAIR Act This bill makes various changes to the federal student loan system, including by establishing a new income-driven repayment plan and limiting the authority of the Department of Education (ED) to propose or issue regulations and executive actions related to federal student aid programs. The bill directs ED to provide at least 12 notices to each borrower of a federal student loan indicating (1) the date on which the borrower is required to make monthly loan payments; (2) the borrower's options for repayment; and (3) the options available to a borrower who is in default, including the option to consolidate or rehabilitate loans. ED must also conduct additional outreach to at-risk borrowers. Additionally, the bill replaces existing federal student loan repayment plans with one standard 10-year repayment plan and one income-driven repayment plan. The bill outlines the terms of this new income-driven repayment plan. The bill provides deferment options for borrowers with loans made on or after July 1, 2024. The bill prohibits ED from authorizing additional deferment options or periods of deferment other than those authorized by this bill. The bill allows borrowers to rehabilitate a defaulted loan twice (currently, only once). The bill also prohibits ED from issuing a proposed rule, final regulation, or executive action related to federal student aid programs if ED determines that the rule, regulation, or action (1) is economically significant, and (2) would result in an increase in a subsidy cost.