Income Based Repayment Complicated, Overlooked

Income-Based Student Loan Repayment Complicated, Overlooked

student loan
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Student loan concerns continue to grow in large part because many borrowers are still unaware of what their options are and how they work — namely how income-based repayment will benefit them.

According to the New York Federal Reserve, nearly 5 million people are behind on payments. Only 1.1 million people are enrolled in the federal income-based repayment program and 474,000 are enrolled in income-contingent repayment, a similar program with different conditions.

Many borrowers complain about the complexity of the IBR program enrollment, which is deterring those who may benefit from the program. The average student borrows from multiple sources, and those loans must be consolidated before a graduate can enroll in the program. It doesn’t help that the consolidation process is intimidating enough for many.

Advocacy groups and lawmakers are drafting legislation that would make the IBR a default for students immediately upon graduation. The program would be explained through the mandatory exit counseling — which would also be revamped to better educate borrowers before they leave the safety of school. The hope is that the IBR as a default will catch borrowers before they fall.

Inside Higher Education takes a deeper look at a problem that is plaguing many Americans.