Many eligible borrowers do not participate in the Department of Education’s (Education) Income-Based Repayment and Pay As You Earn repayment plans for Direct Loans, and Education, says a recent report from the Government Accountability Office. Furthermore, government agencies have not provided information about the plans to all borrowers in repayment.
These plans provide eligible borrowers with lower payments based on income, and also set timelines for forgiveness of any remaining qualifying student loan balances.
While the Department of the Treasury estimated that 51 percent of Direct Loan borrowers were eligible for Income-Based Repayment as of September 2012, the most recent available estimate, Department of Education data show that only 13 percent of borrowers were participating, as of September 2014. An additional 2 percent were in the Pay As You Earn program.
According to the GAO, even though the Department of Education has a strategic goal to provide superior information and service to borrowers, the agency has not consistently notified borrowers who have entered repayment about the plans. As a result, borrowers who could benefit from the plans may miss the chance to lower their payments and reduce the risk of defaulting on their loans, the report’s authors said.
To read the entire GAO report, click here.