Enrollment in income-based repayment remains low despite concern over rising student debt
- Despite concern about rising student debt, many recent graduates and struggling borrowers remain unaware of income-based repayment programs for student loans, with only 1.1 million enrolled in an income-based repayment program.
- President Obama has proposed an expansion of income-based repayment called "Pay As You Earn," which would lower payments from 15% of a borrower's monthly discretionary income to 10%, forgive loans after 20 years instead of 25 and make the program's application easier to navigate.
- A Romney Administration would be unlikely to keep "Pay As You Earn," as Mitt Romney is against student loan forgiveness and Congressional Republicans have expressed concern that such a program will only encourage students to take on more debt.
From the article:
Amid rising concern about student debt, fewer borrowers are taking advantage of the Education Department's income-based repayment option -- which lets them pay 15 percent of their monthly income toward federal student loans -- than could benefit from it. In March, the New York Federal Reserve found 5 million Americans had fallen behind on student loan payments. Only 1.1 million borrowers are enrolled in income-based repayment. Another 474,000 are in income-contingent repayment, a similar program with slightly different rules, but many of those were automatically enrolled after defaulting on their loans. ...
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