Congress eliminated the 20/220 rule from the HEA and replaced it with the new IBR plan, which the Department believes “will provide assistance to more borrowers with high levels of debt over a much longer period of limited earnings than the economic hardship deferment.”

The IBR plan does not provide for postponing all borrower payments for a period of time like a deferment. It provides for reduced payments when a borrower can demonstrate partial financial hardship. Depending upon the borrower's circumstances, IBR payments may be less than accrued interest, and some borrowers may not be required to make a payment.

In its comments accompanying the final regulations, the Department says it disagrees that the economic hardship eligibility criterion should be retained in the Federal Perkins Loan Program. The Department states that they disagree with the contention that there would be no Federal costs in keeping the provision for the Federal Perkins Loan Program, and says “The Perkins loan fund is a Federal asset and, during deferment periods, the fund loses both borrower principal payments and interest that would otherwise accrue and be paid by the borrower.”

The Department also does not believe it is appropriate to continue the economic hardship criterion only for borrowers in the Perkins Loan Program, “the title IV loan program with the lowest average indebtedness and the most generous repayment terms.” Finally, the Department states that since Perkins Loan borrowers generally also have FFEL or Direct Loans, the regulations that govern the economic hardship deferment should be consistent across all the title IV student loan programs.

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