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Department proposes removing 'partial financial hardship' from IDR eligibility but preserves payment cap tied to 10‑year standard plan
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Summary
Department staff proposed striking the 'partial financial hardship' (PFH) gate from income-driven repayment rules and instead using an 'applicable amount' (15% of adjusted gross income over 150% of poverty) and a payment cap tied to a 10-year repayment term; negotiators raised concerns that the cap continues to operate like PFH.
The Department presented draft changes to income-driven repayment provisions (682215 and 685209) that remove repeated references to the statutory concept of "partial financial hardship" (PFH). In its place, the draft introduces an "applicable amount" defined as 15% of the amount by which a borrower's adjusted gross income (and that of a spouse, if applicable) exceeds 150% of the poverty guideline.
Tammy Abernathy summarized the change and said staff removed the PFH cross-references in multiple paragraphs to simplify eligibility language. "Applicable amount means ... 15% of the result obtained by calculating ... adjusted gross income exceeds a 150% of poverty guideline," staff read during the session.
Negotiators raised a concern that removing PFH from the text while preserving a cap linked to what a borrower would pay under a 10-year standard repayment term could reproduce PFH-like gatekeeping in practice. Department counsel and staff said PFH language in the statute was removed but that certain payment-cap concepts (the aggregate monthly payment test) were carried forward where congress left them in place; staff invited written clarifications to resolve the drafting ambiguity before the next meeting.
