Federal Student Loan Repayment Trends Look Optimistic

(Newswire.net — July 15, 2016) Boca Raton, FL – The United States Department of Education has revealed in its most recent Quarterly Student Aid Report that enrollment in income-based repayment plans continue to show considerable increases while delinquencies, deferments and defaults on federal student loans are progressively dropping.

The latest report, released March 17, 2016, shows enrollment in income-driven repayment options such as Pay As You Earn (PAYE) and Income-Based Repayment (IBR) is steadily increasing. As of December 2015, almost 4.6 million Direct Loan borrowers had registered in IDR plans, which is an increase of 48% from December 2014 and an increase of 140% from December 2013. Furthermore, the newest repayment plan, Revised Pay As You Earn (REPAYE), came into effect Dec 17, 2015. This program limits student loan payment amounts to 10% of the borrower’s discretionary monthly income and is expected to boost plan enrollment in 2016.

The federal report also had promising things to say about borrowers successfully making payments on their loans. Deferment of loans due to financial hardship or unemployment have gone down by almost 35% compared to 2014 while delinquencies fell by 6%. The government also recovered about $2.2 billion dollars in defaulted loans, mostly due to rehabilitation programs which made borrowers eligible for income-driven repayment and deferment programs and also allowed them to miss 1 payment in 10 consecutive months without penalty.

Over the past few years, the government has taken impressive strides to make education more affordable for Americans. Loan repayment programs have been developed to reduce student loan debt and to ensure monthly repayment options are realistic and better aligned with the borrower’s income. The goal is to have students graduate without mountainous debt and be able to consistently make affordable loan payments.

The Federal Student Aid Data Center, introduced in 2009, prepares and posts The Quarterly Student Aid Report to provide the public with regular, snapshot views of key findings of the Federal Family Education Loan (FFEL) program, which is worth about $357 billion dollars. The information is meant to increase transparency of this open government initiative to the public, provide consistent information and be used to compare figures from year to year where able.

This most recent Quarterly Student Aid Report report shows some of the government’s strategies are working to reduce student debt, however, it is clear there is still further work to be done to make them more effective

For further details about this report, visit Federal Student Aid.