U.S. Departments of Education and Treasury Continue Raising Awareness of Income-Driven Repayment Options for Federal Student Loans

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U.S. Departments of Education and Treasury Continue Raising Awareness of Income-Driven Repayment Options for Federal Student Loans

Partnerships with H&R Block and Intuit, Inc. encourage users to explore their student loan repayment options and check their eligibility for lower monthly student loan payments as they prepare their tax returns
February 4, 2015

The U.S. Treasury Department and the U.S. Department of Education will continue working with tax preparers during the 2015 tax filing season to increase federal student loan borrowers' awareness of income-driven repayment plans. This year, two of the largest tax preparers in the country, H&R Block and Intuit, Inc., are using their online tax preparation tools to share information about repayment options, including the President's Pay As You Earn (PAYE) plan and the Department of Education's Repayment Estimator with student loan borrowers.

Income-driven repayment plans allow eligible borrowers to lower their monthly federal student loan payments to as low as 10 percent of the borrower's discretionary income. The Repayment Estimator enables borrowers to compare estimates of their monthly student loan payments, projected loan forgiveness where applicable, length of repayment, total interest, and total amount paid under all federal student loan repayment plans.

"Student loans help millions of Americans invest in themselves and contribute to the potential of our country," said Sarah Bloom Raskin, deputy secretary of the Treasury Department. "For students to make the best use of this investment requires arming them with information about flexible repayment options."

In 2010, President Obama signed into law an income-driven repayment plan for federal borrowers that would lower the cap of a borrower's monthly payment to 10 percent of discretionary income for borrowers who first take out loans after July 1, 2014. In October 2011, the President took executive action to make the lower monthly payment amount available to eligible borrowers in 2012, rather than 2014. This action made student loans more affordable for more borrowers by reducing their monthly student loan payments.

"A postsecondary education is the single most important investment that Americans can make in their futures," said Education Under Secretary Ted Mitchell. "Through these partnerships, we will continue to help empower borrowers with the tools they need to make informed decisions at every step of the process, from selecting a postsecondary institution to managing their student loan debt and staying on track to repayment."

Intuit is continuing last year's partnership with the U.S. Departments of Treasury and Education to present TurboTax's online users with information about income-driven repayment options in the TurboTax product. In addition, for the first time, TurboTax will incorporate information about income-driven repayment options into a TurboTax newsletter to its customers.

H&R Block is also providing information to raise awareness about income-driven repayment options. This year, H&R Block is incorporating information about income-driven repayment options in tax tips accessible to users of H&R Block's online tax preparation software and to visitors to the H&R Block website.

"Intuit's mission is to empower individuals to take control of their financial lives. We know that tax time is the perfect opportunity to evaluate one's personal balance sheet and identify areas to improve one's financial health. We are excited about partnering again to highlight these important loan repayment programs – just one more way individuals can take control of their finances," said David Williams, Intuit chief tax officer.

"We're partnering with the Treasury and Education departments because it's the right thing to do," said Bill Cobb, H&R Block's president and chief executive officer. "Rising student loan default rates are a serious problem, but with our deep tax expertise, we're in a great position to help people better understand their income-driven repayment options."

In addition to improving awareness of income-driven repayment options, the Administration has taken several steps to help borrowers better manage their federal student loan debt. President Obama signed legislation lowering federal student loan interest rates for millions of students. He proposed improving college affordability for students and federal student loan borrowers by expanding and making the American Opportunity Tax Credit permanent. In his budget, the President proposed simplifying education tax benefits, exempting federal student loan debt forgiveness from taxation for qualified borrowers in income-driven repayment plans, and making two years of community college free as part of the America's Promise proposal for responsible students.

The Obama Administration is also supporting initiatives like Treasury's Financial Empowerment Innovation Fund to study decision-making as it relates to higher education, including the effects of providing students with estimates of their post-college salaries, and tech-based tool demonstrations to inform students about their financing options. These efforts complement the Department of Education's ongoing work to expand the Pay-As-You-Earn income-driven repayment plan to millions of additional borrowers.

For more information on income-driven plans, and other repayment options, please visit StudentAid.gov/plans.

To use the Repayment Estimator, visit StudentAid.gov/repayment-estimator.