An Easier Way for Students to Enroll in Income-Based Loan Repayment Program

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There’s good news for students looking to make their monthly payments on federal student loans more manageable: The Department of Education announced a new tool this week that will streamline the enrollment and recertification processes for borrowers eligible for income-based repayment (IBR) of their federal student loans.

Federal student loan borrowers whose monthly loan payments exceed 15 percent of their monthly income may be eligible for an income-based repayment plan. Under the IBR plan, a borrower reduces her monthly payments by stretching those payments out over 25 years. As useful as IBR may be for helping borrowers pay down their debt without going bankrupt, enrollment in the plan has tended to be cumbersome. For instance, it requires substantial documentation to prove the borrower is eligible for the reduced payments, and annually borrowers are required to recertify their eligibility to participate in the plan.

To alleviate these enrollment and recertification burdens, the Department of Education, at the urging of the president and in conjunction with other agencies, developed a new tool that will streamline the processes. Borrowers may now have their income tax and federal loan information automatically imported into their enrollment or recertification applications and routed directly to their federal loan servicer. This new option is expected to improve the accuracy of information submitted and speed up the timeline for borrowers to receive a decision on their eligibility.

Currently, IBR-eligible borrowers with at least one Direct Loan or one Federal Family Education Loan (FFEL) are eligible to enroll or recertify with the new tool. There are plans to expand the tool to all federal borrowers over the next several months. Interested borrowers can try the tool on the studentloans.gov portal. If their particular student loans are not yet eligible for enrollment through the new tool, borrowers will be directed to their current loan servicer for information on how to enroll in IBR the “old-fashioned way.”

Income-based repayment is one of several important tools available to borrowers saddled with high levels of student loan debt. However, its usefulness has been diminished by an unwieldy enrollment process. While there is still a lot of work to be done to streamline the repayment process and help students manage the cost of higher education, it is encouraging to see the federal government appreciate the severity of our current student debt crisis. The new tool is an important step toward simplifying the repayment process and helping borrowers avoid default.

— Nicole Tortoriello