4 Things to Do During Your Student Loan Grace Period

Grace 6 month 9 monthYour student loan grace period is a set amount of time after you graduate, leave school, or drop below half-time enrollment before you must begin repayment on your loan. For most student loans, the grace period is six months but in some instances, a grace period could be longer. The grace period gives you time to get financially settled and to select your repayment plan.*

Here are four things you can do during your grace period to prepare for repayment:

1. Get Organized

Start by tracking down all of your student loans. There is a website that allows you to view all your federal student loans in one place.

You can log into www.nslds.ed.gov using your Federal Student Aid PIN to view your loan balances, information about your loan servicer(s), and more.

Note: Don’t forget to check to see if you have private student loans.

2. Contact Your Loan Servicer

loan servicer is a company that handles the billing and other services on your federal student loan. Your loan servicer can help you choose a repayment plan, understand loan consolidation, and complete other tasks related to your federal student loan, so it is important to maintain contact with your loan servicer. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.

To find out who your loan servicer is, visit nslds.ed.gov. You may have more than one loan servicer, so it is important that you look at each loan individually.

3. Estimate Your Monthly Payments Under Different Repayment Plans

Federal Student Aid recently launched a Repayment Estimator that lets you compare your monthly student loan payment under different repayment plans to help you figure out which repayment plan is right for you.

Just go to www.StudentLoans.gov –> Log in –> Click “Repayment Estimator” in bottom left corner. It will pull in all of your federal student loan information automatically so you can compare repayment plans based on your specific situation.

4. Select The Repayment Plan That Works For You

Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time. Flexible repayment options are one of the greatest benefits of federal student loans. There are options to tie your monthly payments to your income and even ways you can have your loans forgiven if you are a teacher or employed in certain public service jobs. Once you have determined which repayment plan is right for you, you must contact your loan servicer to officially select a new repayment plan.

* Not all federal student loans have a grace period. Note that for many loans, interest will accrue during your grace period.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

Class of 2013: What’s Next for Your Student Loans?

choose a repayment plan imageI’m not afraid to admit that being a college senior is a little frightening (okay, slight understatement-it’s extremely frightening!) As the Class of 2013 prepares to say goodbye to the comforts of our college community and say hello to the real world, we are faced with many realities. Where will I live? How am I going to find a job? Will I make ends meet?  Will I be happy?

And with all these new exciting challenges and responsibilities, one of the last things on most of our minds is repaying our student loans. Yet it’s one of our responsibilities and we should be prepared for when the first bill arrives in the mail.

I will be honest in saying that this repayment process is a little intimidating, and before writing this post I was at a loss of where to begin. Luckily, the Department of Education’s Office of Federal Student Aid (FSA) has tools available to walk soon-to-be grads through the loan repayment process:

  • Exit Counseling: Recently redesigned to be more interactive, Exit Counseling provides important information to student borrowers who are preparing to begin student loan repayment. Exit counseling is required when you graduate, leave school, or drop below half-time enrollment, so talk to the financial aid office at your school about completing it.
  • Federal Loan Repayment Plans: Understanding the details of repayment can save you time and money. Find out when repayment starts, how to make your payment, repayment plan options, what to do if you have trouble making payments, and more!
  • Repayment Estimator: Federal Student Aid recently launched a Repayment Estimator that allows you compare your monthly student loan payment under different repayment plans to help you figure out which option is right for you.  Once you log-in, it will automatically pull in all of your federal student loan information so you can compare repayment plans based on your specific situation.

So with all of these great resources, I’ve found that things are clearer, and not quite as scary. Class of 2013 we are about to embark on a new adventure, best of luck to each and every one of you!

For additional information and tips, visit Federal Student Aid on Twitter , Facebook, and YouTube.

Kelsey Donohue is a senior at Marist College (N.Y.), and an intern in ED’s Office of Communications and Outreach

New Student Loan Repayment Option to Help Recent Graduates

Graduation CapsFor many recent college graduates, monthly student loan payments can be overwhelming. The good news is that a measure of relief is on the way for more than a million borrowers. The Obama Administration recently announced changes that will allow many borrowers to take advantage of a new repayment plan that could  lower their monthly federal student loan bills.

The plan, known as Pay As You Earn, caps monthly payments for many recent graduates at an amount that is affordable based on their income. That helps borrowers to stay on track to repay their loan and avoid default.

The Pay As You Earn plan, which President Obama first announced in October 2011, caps payments for Federal Direct Student Loans at 10 percent of discretionary income for eligible borrowers.

As many as 1.6 million Direct Loan borrowers could reduce their monthly payments under the new Pay as You Earn plan. The new option complements additional repayment plans offered by ED to help borrowers manage their debt, including Income-Based Repayment, which caps monthly loan payments at 15 percent of a borrower’s discretionary income. Borrowers who are not eligible for Pay As You Earn may still qualify for Income-Based Repayment, which more than 1.3 million borrowers already use.

To learn more about Pay As You Earn, and to see if it’s right for you and if you qualify, please visit studentaid.gov/payasyouearn.

What Is a Loan Servicer and Why Should I Care?

Loan Servicer GraphicSo you took out a federal student loan and now it’s time to pay it back. I was in your exact position a year ago and even though I was working at Federal Student Aid, the student loan repayment process was overwhelming.

One of my first questions was: Why am I receiving federal student loan bills from a company rather than the U.S. Department of Education? If you have asked yourself a similar question, this may help:

What is a loan servicer?

A loan servicer is a company that handles the billing and other services on your federal student loans. The statement you receive in the mail is coming from a loan servicer on behalf of the U.S. Department of Education.

How do I find out who my loan servicer is?

To view information about all of the federal student loans you have received and to find contact information for your loan servicer, visit www.nslds.ed.gov and select “Financial Aid Review.” You will then be prompted to log in using your Federal Student Aid PIN, so make sure you have that handy.

Note: If you have multiple federal student loans, you may have more than one loan servicer, so make sure you click through each loan individually for information specific to that loan.

Why does it matter?

There are several reasons that being familiar with your loan servicer is important, including the fact that your loan servicer:

Moral of the story: Keep in contact with your loan servicer.

The student loan repayment process can be confusing, especially if you’re new at it like me, but your loan servicer is there to help. Make sure you stay in touch with them and use the resources they have available for you.

Nicole Callahan is a new media analyst at the Department of Education’s office of Federal Student Aid.

3 Things to Do During Your Student Loan Grace Period

Student Loan Grace PeriodYour student loan grace period is a set amount of time after you graduate, leave school, or drop below half-time enrollment, but before you must begin repayment on your loan. The grace period gives you time to get financially settled and to select your repayment plan. Not all federal student loans have a grace period. Note that for many loans, interest will accrue during your grace period.

Here are three things you can do during your grace period to prepare for repayment:

1. Get Organized

Start by tracking down all of your student loans. There is a website that allows you to view all your federal student loans in one place. You can log in to www.nslds.ed.gov using your Federal Student Aid PIN to view your loan balances, information about your loan servicer(s), and more.

Note: Don’t forget to check to see if you have private student loans. The Consumer Financial Protection Bureau has a great Student Debt Repayment Assistant to help you learn about the repayment process, whether you have federal loans, private loans or both.

2. Contact Your Loan Servicer

loan servicer is a company that handles the billing and other services on your federal student loan. Your loan servicer can help you choose a repayment plan, understand loan consolidation, and complete other tasks related to your federal student loan, so it is important to maintain contact with your loan servicer. If your circumstances change at any time during your repayment period, your loan servicer will be able to help.

To find out who your loan servicer is, visit nslds.ed.gov. You may have more than one loan servicer, so it is important that you look at each loan individually.

3. Explore Your Repayment Plan Options

Although you may select or be assigned a repayment plan when you first begin repaying your student loan, you can change repayment plans at any time. Flexible repayment options are one of the greatest benefits of federal student loans. There are options to tie your monthly payments to your income and even ways you can have your loans forgiven if you are a teacher or employed in certain public service jobs. Work with your loan servicer to determine which repayment plan is right for you.

 

Five Things to Know About Your Student Loans

Over the next few months, many students who graduated or left school in the spring of 2012 will reach the end of their grace period and start repaying their student loans. Now is a great time to brush up on the basics of student loans.

student loans logoFinancial aid comes in many forms. Grants and scholarships are often called “gift aid” because they don’t have to be repaid. Another form of financial aid is work-study.  Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.

Student loans are the other major form of financial aid. A loan is money that a student borrows and must pay back, so it is important that you understand your options and responsibilities.

Here are five things you should know about your student loans:

1.     Federal vs. Private Loans

Federal loans are managed and backed by the U.S. government.  These loans are designed to provide students with fair treatment.  Because they offer the best terms for borrowers, federal loans are the best option for students.

Private loans are managed and backed by private banks.  These banks are not subject to the same rules and regulations of federal loans, and may feature higher (or variable) interest rates, stricter repayment plans and penalties, or other terms that may make them more expensive.

You also may encounter other, less common types of loans, such as state loans (managed by your state) or institutional loans (managed by your college or university).  In all cases, carefully read and understand the loan terms before deciding to accept.

2.     Unsubsidized vs. Subsidized Loans

Federal loans can be either subsidized or unsubsidized.  A subsidized student loan means that the government pays the interest for you while you’re in school, as long as you’re enrolled at least half time.  That means that if you take out a $5,000 subsidized student loan to pay for your freshman year, and graduate in four years of full-time classes, you’ll still owe $5,000 when you graduate.  Interest will only “accrue,” or be added to the repayment amount, after you stop being a student.

An unsubsidized student loan means that interest “accrues” even while you’re in school.  Some federal loans and nearly all private loans are unsubsidized.  You don’t always have to pay the interest while you’re a student, but the total amount you’ll need to repay is still growing.  If you have an unsubsidized student loan, it’s a good idea to pay the monthly interest while in school, even if you don’t need to.

3.     Loan Interest Rate

The interest rate is a percentage that determines how much your loan balance increases each year.  Consider it the price that you pay for being able to borrow money from the lender.  For example, if you have a $5,000 loan with a 5 percent interest rate, your annual interest will be $250 (5% x $5,000), which means at the end of the year you will owe $5,250.

4.     Loan Length of Repayment

When you start repaying a loan, you have a set amount of time to repay your loan known as the length of repayment.  A longer length of repayment means a lower monthly payment, but it also means a higher total amount repaid over the life of the loan.

Federal loans typically follow a ten-year repayment plan schedule, but depending on the type of repayment plan, your length of repayment could last as long as thirty years.  One key benefit of Federal loans is the ability of the borrower to switch repayment plans without penalty.  If you find a given repayment plan too difficult, research your options regarding extended repayment plans to determine if one is right for you.

5.     Monthly Loan Payments

The principal, interest rate, and length of repayment of a loan determine your monthly loan payment.  This is the amount you’ll need to pay each month.  Each loan has a separate monthly loan payment, so if you have more than one loan, you will have to pay several loan payments each month.  If you prefer to have a single loan payment, you should consider researching the Federal Loan Consolidation program to see if it’s right for you.

You may find that the monthly loan payments are too high and that you cannot pay them all.  If this occurs, seek help.  Research options such as income-based repayment, the public service loan forgiveness program, loan deferment, or loan forbearance to determine if one is right for you.  Remember, however, that options designed to decrease your monthly loan payments may increase the total amount you have to repay over the life of the loan.

Loans have many different characteristics, but they don’t have to be confusing.  Always carefully read and understand a loan’s features before accepting it. Your loan servicer or financial aid counselor can be great resource if you need help understanding the terms of a loan. Additionally, The Department of Education offers a number of tools, such as our repayment calculators and the Financial Awareness Counseling Tool (FACT), to help you research your options. By educating yourself, you will be prepared to make the best decisions for your own future.

ED launches new, mobile-optimized site: StudentAid.gov

If you’re a student thinking about college or career school or a borrower already in repayment, the U.S. Department of Education’s office of Federal Student Aid has launched some exciting new tools to help you through the financial aid process.

StudentAid.gov is a new website that provides straightforward and easy-to-understand information about planning and paying for college. The site combines content and interactive tools from several ED websites.

StudentAid.gov offers more than just information in an easy-to-read format; it also features videos and infographics to help answer the most frequently asked questions about financial aid.

As a mobile-optimized website, StudentAid.gov is fully accessible on tablets and smartphones. StudentAid.gov’s new look was tested with students, parents and borrowers, and we will continue to make improvements and updates based on your feedback.

Some New Features

Income-Based Repayment Calculator: If your student loan debt is high but your income is modest, you may qualify for the Income-Based Repayment Plan (IBR). To find out whether you might be eligible to repay your loan under IBR, use our new IBR calculator.

Videos: We’ve developed videos to help make the financial aid process easier to understand. We’ll continue to roll out new videos and update our playlists on the Federal Student Aid YouTube channel.

Infographics: Our infographics will help you understand what steps you need to take to get money for college or career school.

Social Media: In addition to StudentAid.gov, Federal Student Aid has also launched Twitter, Facebook and YouTube to offer you alternative options to learn about the student aid process.

Learn More at #AskFAFSA Office Hours

If you would like to learn more about these new resources, @usedgov will be interviewing @FAFSA on Twitter on July 25th at 6pm ET to highlight some of the helpful new features that are available. Whether you’re just starting to think about college or career school, currently enrolled or in the repayment process, we encourage you to join the conversation.

Here’s how it works:

- Have suggestions or questions about the new resources that are available? You can start submitting them on Twitter today. Be sure to include the #AskFAFSA hashtag in your tweets. We’ll continue to take questions throughout the week and during the live event.

- On Wednesday, July 25th, at 6pm ET, follow @usedgov & @FAFSA or the #AskFAFSA hashtag on Twitter to join the conversation. Suggestions and questions are encouraged!

- Can’t make the live session? A summary of #AskFAFSA Office Hours, including the full Q&A, will be posted on Storify and the ED.gov blog following the event.

For more information visit: http://bit.ly/NCGXVY

New Tool Helps Students Manage Loan Debt

The Department of Education launched a new tool this week that helps students with financial management basics including information about current loan debt and estimates for student loan debt levels after graduation.

A picture of the new website.

The Department of Education launched a new tool this week that helps students with financial management basics.

The new tool—the Financial Awareness Counseling Tool—has five interactive tutorials that are tailored for each student after they sign in and access their individual loan history. The five tutorials are:

    1. Understand Your Loans
    2. Manage Your Spending
    3. Plan to Repay
    4. Avoid Default
    5. Make Finances a Priority

The Counseling Tool is part of a larger effort by the Obama Administration to make it easier for students and their families to understand the cost of college. In the coming weeks the Administration will also launch its model financial aid shopping sheet, and encourage colleges to adopt the sheet to ensure prospective students understand the cost of college before their first semester.

Click here to visit the Financial Awareness Counseling Tool, and visit studentloans.gov for more information.

June’s #AskFAFSA Office Hours Explores Student Loan Repayment Options

During June’s #AskFAFSA Office Hours, we featured  three recent student loan borrowers from a variety of fields who are using various resources (some more out of the box than others) to repay their student loans. Joe, Tiffany and Ian answered your questions about their experience with the student loan repayment process. Here is a summary of the Q&A:

Read More

White House Office Hours with Secretary of Education Arne Duncan

Cross-posted from the White House Blog.

Secretary of Education Arne Duncan is joining us for special session of White House Office Hours on Wednesday, June 27th at 2:00 p.m. EDT. During a live Q&A on Twitter, Secretary Duncan will answer your questions about college affordability and the administration’s education policies and priorities.

Will you join us? Here’s how it works:

  • Ask your questions now and during the live event on Twitter with the hashtag #WHChat
  • Follow the Q&A live through the @WHLive Twitter account
  • If you miss the live Q&A, the full session will be posted on WhiteHouse.gov and Storify.com/WhiteHouse

Today, higher education isn’t a luxury – it’s a necessity that every American family should be able to afford. But it’s also getting more and more expensive.

For the first time ever, Americans owe more in student loans than in credit card debt. That’s why the President is calling on Congress to keep interest rates low so that every hardworking student gets a fair shot at the skills and training needed to get a good job in today’s economy.

If Congress doesn’t act, interest rates on federal student loans will double on July 1 and more than 7 million students around the country will rack up an average of $1,000 of extra debt each.

Kori Schulman is Deputy Director of Outreach for the White House Office of Digital Strategy

Take Politics Out of Student Loan Process

This op-ed appeared in today’s edition of Politico.

Last month, I had the honor of giving the commencement address at Howard University. I was filled with hope and inspiration looking out at the faces of all those young people, often the first in their family to attend college.

Those students and their families worked hard, sacrificed and saved to go to Howard. And for many of them, getting a degree would not have been possible without the help of Pell Grants and low-interest federal student loans.

These students and parents understand that a post-secondary education is the ticket to economic success in America. But while it’s never been more important to have a degree, a certificate or an industry-recognized credential — it’s also never been more expensive.

Since 1995, college costs across the country have increased almost five times faster than median household income. As a result, students and their families are taking on more and more debt. Borrowing to pay for college used to be the exception, now it’s the rule.

About two-thirds of college graduates borrow to go to school, and on average they’re graduating with more than $26,000 in debt. In an economy still recovering from the worst downturn since the Great Depression, getting a job is hard enough, but paying back those loans is daunting.

To make matters worse, a policy change is coming at the end of this month that will make getting out of debt more expensive for more than 7 million young Americans next year: Without congressional action, the interest rate on Stafford loans will double from 3.4 percent to 6.8 percent, starting July 1.

Based on the average loan amount, doubling the Stafford loan interest rate will add more than $1,000 in total costs for borrowers. For students who borrow heavily to go to college, it could cost even more. Only Congress can keep these interest rates from doubling. And yet Congress has so far failed to deliver.

While I appreciate that some congressional Republicans have recently indicated they’re now willing to work with the administration to find a solution, the debate so far has been largely divided along party lines and made no progress.

Americans are tired of political fights in Washington. It’s time to stop talking and start doing. People want Congress to put politics aside and come together to produce real results that make a difference. And you can count college students at the top of that list. I am optimistic that both parties can — and should — find common ground to reach a bipartisan compromise.

President Barack Obama has traveled to colleges and universities across the country, urging Congress do its part to keep college affordable by stopping student loan interest rates from doubling this July. With so many students struggling to both make ends meet and afford the skyrocketing price of a college degree, now is not the right time to heap more costs on them.

All of us share responsibility for making college affordable and keeping the middle-class dream alive. Parents need to be smart consumers, and students need to finish on time or even early.

Colleges and universities need to be efficient and productive in delivering educational value to students. Graduating students ready for success should be as important to professors as research and publishing. Institutions should ensure that keeping costs down does not take a back seat to the expensive amenities outside the classroom. Where it makes sense, they should offer lower-cost options such as online learning.

States must do their part to make higher education a higher priority in their budgets. Last year, 40 states cut higher education spending — the single most significant factor in tuition increases.

The Obama administration is working everyday to do its part. But we need Congress to step up and help. Over the past two years, we’ve worked with Congress to dramatically boost Pell grant funding by passing the Recovery Act. We’ve also eliminated billions of dollars in wasteful taxpayer subsidies to banks, plowing the savings into aid for low-income college students.

We’re helping students better manage their debt after graduation with programs like income-based repayment, loan consolidation and public service loan forgiveness. And we’re proposing to double the number of work-study jobs and make the American Opportunity Tax Credit permanent, which would provide $2,500 annually for working families to pay for college. We’re also calling for new incentives for states and institutions to keep college costs from escalating.

We took all of these steps because the president and I believe education is a public good. College should not be reserved only for those who can afford it. Investing in education is the best investment America can make to bolster its competitiveness in a knowledge-based, global economy. If we don’t invest today, we will lose tomorrow.

Now, America can take another simple step forward and keep the interest rate on Stafford loans at 3.4 percent — but only if Congress does its job and comes together around a fair and responsible way to pay for it.

In 2007, a Democratic-controlled Congress and a Republican president came together to lower interest rates on these loans because it was the right thing to do. That Congress did not put politics ahead of students and neither should today’s. Let’s do the right thing for America’s students — and for our nation’s economy.

Arne Duncan is the secretary of education.

Income Based Repayment: Everything You Need to Know

Cross-posted from the White House blog.

Over the past several years, the Obama Administration has worked to improve repayment options available to responsible student loan borrowers. Since 2009, former students have been able to enroll in an “Income Based Repayment” (IBR) plan to cap their student loan payments at 15 percent of their current discretionary income if they make their payments on time.

In 2010, President Obama signed into law an improved income-based repayment plan that would lower this cap to 10 percent of discretionary income for students who take out loans after July 1, 2014. Then, last October, the President announced an executive action to make that lower cap available to more borrowers by the end of 2012, rather than 2014. The latest change will likely reduce monthly student loan payments for more than 1.6 million responsible student borrowers.

Despite these opportunities and policy improvements to help graduates make their monthly payments, too few responsible borrowers are aware of their repayment options.  Even among borrowers who understand their options, many have difficulties navigating and completing the application process.

Today, President Obama is introducing a Presidential Memorandum that will help educate more students about their loan repayment options and streamline the IBR application process. Read through the questions below to learn more about income based repayment and how these changes might affect you.

1. What is income-based loan repayment?

Income-Based Repayment (IBR) is a repayment plan that caps your required monthly payments on the major types of federal student loans at an amount intended to be affordable based on income and family size. All Stafford, Grad PLUS, and Consolidation Loans made under either the Direct Loan or Federal Family Education Loan programs are eligible to be included in the program. Non-federal loans, loans currently in default, and Parent PLUS Loans are not eligible for the income-based repayment plan.

The program lowers monthly payments for borrowers who have high loan debt and modest incomes, but it may increase the length of the loan repayment period, accruing more interest over the life of the loan.

2. Who qualifies for IBR?

IBR helps people whose federal student loan debt is high relative to income and family size. Currently, your loan servicer (the company you make your loan payments to) determines your eligibility, but starting in September 2012, students won’t have to contact their loan servicer to apply—they will be able to apply directly through the Department of Education’s website, thanks to a new directive from President Obama.

You can use the U.S. Department of Education’s IBR calculator to estimate whether you are likely to qualify for the plan. The calculator looks at your income, family size, and state of residence to calculate your IBR monthly payment amount. If that amount is lower than the monthly payment you are paying on your eligible loans under a 10-year standard repayment plan, then you are eligible to repay your loans under IBR.

3. Will my eligibility change if I’m married? What if my spouse also has loans?

If you are married and file a joint federal tax return with your spouse, both your income and your spouse’s income are used to calculate your IBR monthly payment amount.

If you are married and you and your spouse file a joint federal tax return, and if your spouse also has IBR-eligible loans, your spouse’s eligible loan debt is combined with yours when determining whether you are eligible for IBR. If the combined monthly amount you and your spouse would pay under IBR is lower than the combined monthly amount you and your spouse are paying under a 10-year standard repayment plan, you and your spouse are eligible for IBR.

4. How will enrolling in IBR affect my monthly payments compared to the standard repayment plan?

It depends on your income. But, take for example a nurse who is earning $45,000 and has $60,000 in federal student loans. Under the standard repayment plan, her monthly repayment amount is $690. The currently available IBR plan would reduce her payment by $332, to $358.  President Obama’s improved “Pay As You Earn” plan — reducing the cap from 15 percent to 10 percent — will reduce her payment by an additional $119, to a more manageable $239 — a total reduction of $451 a month.

6. How will enrolling in IBR affect my payments over the life of the loan compared to the standard repayment plan?

In general, your payments will increase as your income does, but they will never be more than they would have been under the standard 10-year repayment plan. Although lower monthly payments may be better for some borrowers, lower payments may also mean you make payments for longer and the longer it takes to pay your loans, the more interest you pay compared to the standard repayment plan.

7. Is it possible my payments will be higher under IBR than they would under the standard repayment plan?

IBR will never cause your payments to increase more than they would have been under the standard repayment plan. It is possible, however, that your income and the size of your outstanding loan balance may mean that IBR is not beneficial to you. If your payments would be higher in IBR than they would be in the standard repayment plan, the IBR option will not be available to you.

Also, because a reduced monthly payment in IBR generally extends your repayment period, you may pay more total interest over the life of the loan than you would under other repayment plans.

8. How do I opt in to IBR?

To sign up for IBR, call your loan servicer. The loan servicer is the company that sends you your monthly student loan bills.  If you don’t know who your servicer is or would like more information about your loans, such as the balance and interest rates, you can look it up on www.nslds.ed.gov. To see a list of and contact information for common servicers of student loans held by the US Department of Education, you may visit the Loan Servicer page.

9) What does today’s Presidential Memorandum mean for IBR?

The PM will do three things:

Streamline the IBR application process: The Department of Education, in collaboration with the Treasury Department and Internal Revenue Service, will create a streamlined online application process for IBR that allows student loan borrowers with federally held loans to import their IRS tax return income data directly into the IBR application. This process will allow income information to be seamlessly transmitted so that borrowers can complete the application at one sitting.  Federal direct student loan borrowers will no longer be required to contact their loan servicer as the first step to apply.

Enhance online and mobile resources for loan repayment options and debt management: The Department of Education will create integrated online and mobile resources for students and former students to use in learning about Federal student aid, including an explanation of the various options to cap monthly payments based on income. The Department will also develop and make available to borrowers an online tool to help students make better financial decisions, including understanding their loan debt and its impact on their everyday lives. This tool would incorporate key elements of best practices in financial literacy and link to students’ actual Federal loan data to help them understand their individual circumstances and options for repayment.

Increase awareness of IBR: The Department of Education will instruct Federal direct student loan servicers to make borrowers aware of the option to participate in IBR before a student leaves school and upon entering repayment. The Department of Education will make available for institutions of higher education a model exit counseling module that will enable students to understand their repayment options before leaving school and to choose a repayment plan for their student loans that best meets their needs.

10. How can I find out more?

Visit www.studentaid.ed.gov or call 1-800-4-FED-AID. You can also learn more about other student loan repayment options and find advice on paying loans off more quickly using the Consumer Finance Protection Bureau’s Student Debt Repayment Assistant.

To find out about other changes to student loan programs, including President Obama’s plan to allow borrowers to consolidate Direct Loans and Federal Family Education Loans, click here.

Megan Slack is Associate Director of Digital Content for the White House Office of Digital Strategy