New loan data released by the government shows that default rates continue to rise steadily as they have over the last six years. These statistics reflect only the default rates of recent graduates (within the last 2-3 years) but in fact, there are more than 2.1 million borrowers in default and that number grows every day. What’s more, to be considered in “default” you must be 270 or more days late. There are likely hundreds of thousands (if not millions) of other borrowers who are circling the default drain.
What’s disturbing is that many of these at-risk borrowers could likely be eligible for Income Based Repayment (IBR), which could lower their payments down to quite affordable levels and give them the opportunity to have the remaining balance forgiven in 25 years. As with many of the problems related to student loans, the problem (ironically) is lack of education. Many borrowers don’t know they are eligible or how to apply.
To combat this, we at Tuition.io have prepared information and how-to guides to educate borrowers about IBR, Pay As You Earn (PAYE) and how to enroll in both since our inception. But now the Department of Education is jumping on what we like to think of as our student loan assistance bandwagon and are taking it to the streets – or more accurately to the mailboxes on the streets.
Starting this month, the Department of Education will begin reaching out directly to borrowers who are behind on their payments to let them know about repayment plans they may be eligible for. Education Secretary Arne Duncan says, “We think there are lots of people who could benefit from our income-based repayment programs but haven’t signed up, and we want to get to them before they default. The challenge is getting the word out.”
DOE will be sending out emails to troubled borrowers (so the mailboxes will be virtual), but the contact will hopefully be meaningful. The two biggest programs – IBR and PAYE – allow borrowers to pay just 15% and 10% of their disposable income, respectively, and could be a huge boon to struggling borrowers.
But even with the information in hand, many borrowers remain confused about which repayment programs they may qualify for, how to apply, and what to do if they are turned down. The government has not been great about educating federal student loan borrowers about what they’re getting into, how much they can afford to borrow, how best to repay their debt, and what to do if they can’t afford payments.
The good news is, you don’t have to wait for an email love letter from the Department of Education. Tuition.io can help you get started now. Life is complicated enough – we like to make things simple for you. Click here for a step by step guide on how to get started with Tuition.io and an onboarding checklist. Once you set up your totally free account and link your loans, we can help you manage and optimize your loans.
We can customize a payment plan for you and recommend which beneficial repayment programs (including IBR and PAYE) you may qualify for. We also offer How To guides in our student loan help center on How to Apply for IBR and Apply for PAYE and tons of other topics. Our blog is loaded with great daily articles on student loan news, legislation, tips and strategies for dealing with debt. Don’t wait for the DOE – sign up with Tuiton.io today and get it DOnE!!