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Technical Difficulties Complicate Income-Based Student Loan Repayment

The much-lauded new Income-Based Repayment plan for federal student loans has been available to student borrowers since July, but those who could potentially benefit may have difficulty enrolling in it. The Department of Education's Direct Loans website allows borrowers to enroll online in several student loan repayment plans, including the Standard, Graduated, and Income-Contingent options using a convenient drop-down menu. However, after over three months Income-Based Repayment is still missing from this menu, making it more difficult for borrowers to enroll in this plan, and possibly preventing some students from even realizing it's an option.

For many students who have large debt loads, are struggling to find work or are currently working low-wage jobs that make repaying student loans difficult, the new Income-Based Repayment plan may be their best option for repaying their federal student loans. It allows borrowers to only pay 15% of their discretionary income (their adjusted gross income minus 150% of the poverty line for their household size) once they've entered repayment, then cancels their remaining loan debt after 25 years of repayment. Borrowers enrolled in Income-Based Repayment can also take advantage of the 10-year public service loan forgiveness program, meaning they can make 10 years of affordable payments while working eligible public service jobs, then have their remaining debt forgiven.

Despite its appeal, though, students can currently only apply for Income-Based Repayment using a paper form, blank versions of which are available on the Direct Loans website, though not at all well-advertised. Students can eventually dig through the Direct Loans website to find it (we found it by clicking on the announcement in the upper right corner of www.dl.ed.gov, then following links through two additional pages), then complete it and mail it to the Department of Education. This is a somewhat time-consuming process, obviously, and may deter some borrowers who either lack the time or resources to locate, print and submit the form.

In addition to a missing online option and a buried enrollment form, the Direct Loans website also doesn't list Income-Based Repayment on their repayment options comparison site for logged-in borrowers (a calculator allows you to compare payments among Standard, Graduated, and Income-Contingent options but makes no mention of Income-Based Repayment). While a calculator is available through the Federal Student Aid website, it's not readily accessible from the Direct Loans site. To even choose Income-Based Repayment, then, borrowers will need to employ two different calculators on two different Education Department websites simultaneously, adding another confusing and time-consuming hurdle to the process.

According to The Chronicle of Higher Education, the Department of Education is aware Income-Based Repayment is missing from the online enrollment options on their site, but they don't plan to add it until March, citing a lack of resources due to the possibility Congress will soon switch all federal student loans to the Direct Loans program, as called for in a student loan bill currently under consideration. Hopefully, other revisions to the website will happen then, as well, but for students investigating student loan repayment options before then, enrolling in Income-Based Repayment will remain a hassle.

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