WASHINGTON – The Department of Education has launched a new website to help people with student loans find a repayment option that best suits their needs.
The move is part of an effort the Obama administration is undertaking to enrol an additional 2 million people into repayment programs such as the Pay As You Earn program, which caps monthly student loan payments at 10 per cent of income.
Federal student loan debt exceeds $1.3 trillion, and about one in seven borrowers default on their loans within three years of beginning to repay them.
The Government Accountability Office found last year that many eligible borrowers don’t participate in the income-driven repayment programs, in part, because the department doesn’t consistently notify them of their options.
Education Secretary John King told reporters during a conference call that he’s still paying off loans he took out as a graduate student. He said the debt can be daunting, but is not necessarily a bad thing because college is the single best investment people can make for their future. “It’s debt that pays you back. At the same time, we know costs are rising too fast and too many Americans are struggling to pay back their loans,” King said.
King said the department will also work with 40 outside organizations to educate borrowers about the repayment options available to them. In the long run, the department is moving toward a future one-stop shop where borrowers can more easily manage and repay their loans.
King acknowledged the income-driven repayment plans aren’t the best solution for every borrower. Some would do better paying off sticking with a standard 10-year repayment plan because they’ll end up paying less interest in the long run. “It’s really individual specific,” King said.
The new website is StudentLoans.gov/Repay.