Daily Aid 126: Income based repayment problem

Student Financial Aid News

For those that think making the Department of Education the sole source of student loans is a good idea, this from NASFAA:

“A technical glitch may be discouraging some student-loan borrowers from signing up for an income-based repayment plan, consumer advocates and financial-aid administrators warn,” Chronicle of Higher Education reports. “Income-based repayment, which allows borrowers to repay their loans as a percentage of their income as graduates, went into effect on July 1. But the Education Department’s account-repayment Web site does not list the plan as an option on its drop-down menu, and will not until March. A department spokesman said the agency had planned to update the menu in September, but pushed back the date because of “resource limitations” at the department and its servicing contractor, ACS. In recent months, both entities have been consumed with expanding the department’s loan-processing capacity to accommodate more loans and to prepare for a potential switch of all federal loans to the direct-lending program, the spokesman said.”

Commentary

It’s a telling sign that the Department has had to resort to concealing lending repayment options on its web site due to capacity issues – and not disclosed this fact to the public. Income based repayment has the potential to save thousands of dollars for borrowers, so denying borrowers the ability to access this repayment option needlessly costs graduates a significant chunk of their cash flow after graduation for no good reason other than the inability to serve the needs of students.

Let your elected officials know that ending the federal student loans program as administered through banks and other third parties not only will hurt current students’ ability to choose who they do business with, but is even hurting graduates who have left college.

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