- Jason Harmon signed up for an income-contingent repayment plan for student loans in 1995.
- He was promised loan forgiveness after 25 years, but he is still paying off the debt with nearly a decade to go.
- This is due to poor paperwork management by lending companies which has prevented many borrowers from repaying.
In 1995, Jason Harmon graduated from the University of Arkansas with $26,000 in student debt and enrolled in a 25-year, income-driven repayment plan.
The plan, along with others that have collectively signed up millions of borrowers over the years, was designed to keep his loan repayments manageable by pegging them to his income each year. After the past quarter century, any lingering balance had to be forgiven.
Twenty-seven years later, Harmon now holds a student loan balance of $47,000 and still has an estimated nine years of repayment, and that’s thanks to accrued interest in addition to the mismanagement of long-standing service plans. repayment of student loans based on income. On top of all that, his wife—whom he married in 2004—also has nearly $200,000 in debt.
“We are literally crushed by this debt,” Harmon, 53, told Insider. “That loan will never go away. We might not have a vehicle, we might have a rental instead of a mortgage, we might cut most things out of our lives, and we still wouldn’t touch the debt we have. “
Harmon said he fully intended to repay the debt he borrowed, but at the time the repayment plan established under President Bill Clinton – known as the income-contingent repayment plan – seemed to be the best option for him because he did not earn enough income as a journalist. Then the 2008 recession hit and he lost his job as a journalist, and Harmon said he hadn’t been able to hold down any meaningful job since then. He now works as a fishing guide in Arkansas and only brings in a small income.
Despite employment hurdles, Harmon said he remains consistent in his monthly student loan payments. But problems arose when his loans were transferred to a new student loan company and the progress he had made towards his payments was lost, pushing back his repayment schedule by nearly a decade.
He said he just wanted the loan forgiveness he took out so that he and his wife – whose income they mainly depend on – wouldn’t have monthly bills hanging over their heads for the foreseeable future.
“I don’t think I’ll ever pay off this debt in my entire life,” Harmon said. “And it’s psychologically crippling in the sense that it’s a physical manifestation of your dreams not coming true. And I don’t think the government should be earning interest on the dreams of its citizens.”
“I was in this bureaucratic nightmare”
Harmon thought the terms of the income-contingent plan he agreed to under Clinton were simple. He sent in documents once a year to verify his income, and he made the monthly payments calculated by the Department of Education for him for 25 years, with loan forgiveness at the end.
But he could not have foreseen the challenges that arose in 2013, when his loans were transferred to student loan company MOHELA. After being told of the transfer, Harmon said, he was instructed to select a new version of the income-based reimbursement plan he had been on for 18 years, and when he later contacted the company to request a discount. loan, he said some of his papers were missing, derailing him.
“Suddenly I was in this nightmare of bureaucracy where no question I asked myself was going anywhere – every time I needed help it was an endless phone tree where I just got transferred from one person to another,” Harmon said.
An April NPR investigation provided evidence of paperwork issues with the kinds of plans people like Harmon were on. NPR has obtained internal documents indicating that three student loan companies – PHEAA, CornerStone and MOHELA – did not track payments made by borrowers over the past two decades for their income-driven repayment plans.
And a student loan officer who helped enroll borrowers in a 2007 version of the repayment plan previously described the paperwork to Insider as “too” complicated.
“The government is not fulfilling its obligation”
US lawmakers are aware of the failures of income-driven repayment plans. After NPR’s investigation was published, Rep. Bobby Scott, the lead Democrat on the House Education Committee, said the findings were “worse than expected,” and prominent committee member Rep. Virginia Foxx later said the program “has turned out to be a complete disaster and taxpayers are being left to foot the bill for these mistakes.”
A Government Accountability Office report in April elaborated on the failures of the plans. It found that the department only approved 157 loans for full cancellation under income-driven repayment plans, with an additional 7,700 loans “potentially eligible” for cancellation.
Following revelations of the plan’s failures, the Department for Education in April announced temporary reforms intended to bring together 3.6 million borrowers who were on income-driven plans, and Education Undersecretary James Kvaal said in a recent interview that the department would release details of a new income-based plan in the coming weeks, as part of its regulatory proposals. Insider previously reported that the release of those details had been delayed.
While Harmon agrees these reforms are warranted, he said they were long overdue — and failing to address them changed the trajectory of his life.
“I never wanted a free ride and was always ready to pay back my original loan balance, but the government is not fulfilling their obligation,” he said. “This debt is a trap that has kept us from having children or enjoying married life for decades.”