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Standard repayment: Direct Consolidation Loans that entered repayment after June 30, 2006 use the 10-to-30-year term #10485
Description
standard_repayment_payment amortizes everything in federal_student_loan_balance over 10 years. That balance includes Direct Consolidation Loans that aren't excepted consolidation loans, and most of those entered repayment after June 30, 2006. Their standard plan runs 10 to 30 years, not 10.
Law
- 34 CFR 685.208(b)(1): the 10-year standard plan covers Direct Consolidation Loan borrowers only if they "entered repayment before July 1, 2006".
- 685.208(b)(2)(iii): for consolidation loans entering repayment on or after July 1, 2006, the term follows the total of the consolidation loan and the borrower's other student loans. Under $7,500 it is 10 years; from $7,500, 12; from $10,000, 15; from $20,000, 20; from $40,000, 25; from $60,000, 30. Before July 1, 2026 the same rule was 685.208(c) and (j).
- 685.220(i)(2)(ii), (i)(3)(i): the other education loans count only up to the amount of the consolidation loan.
Size
At 6% with no other loans: $30,000 gives $333.06 in the model against $214.93 over 20 years. $50,000 gives $555.10 against $322.15 over 25 years, and $80,000 gives $888.16 against $479.64 over 30 years.
Fix
#10415 adds standard_repayment.consolidation_repayment_period (the (b)(2)(iii) scale) and uses it for consolidated Parent PLUS loans through a federal_parent_plus_loan_is_consolidated flag. The same approach would work here: split out the consolidation share of federal_student_loan_balance (or add a flag), use the scale for it, and decide whether the income-driven repayment caps that read the 10-year amount should follow. 685.209(f)(2)(ii) and (f)(3)(ii) say "10-year standard repayment plan", so those caps likely stay at 10 years.
Raised in the review of #10415.
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