According to new data released by the US Department of Education, an increasing number of student loan borrowers are taking advantage of opportunities offered by the Obama Administration to ease the affects of their student loan debt.
Quarterly updates added to the Department’s Federal Student Aid Data Center state that as of the end of June, around 3.9 million Direct Loan borrowers had enrolled in Income-Driven Repayment plans – up 56% from the same time last year. These plans are being expanded upon by the Obama administration in an effort to ease federal student loan debt by offering a lower monthly payment based on individual income, with a cap placed at 10% of that number.
“We’ve made it a priority to give Americans better options to manage their student loans and make sure they know about those options,” said U.S. Secretary of Education Arne Duncan. “There’s more work to do, we won’t stop fighting to help people who are struggling to pay back their student loan debt, but the fact that more and more borrowers are taking advantage of the opportunity to cap their monthly payments is a good sign.”
The updates also show a decrease in delinquency rates. The number of borrowers over 31 days late on their repayments have dropped to 21% this year from 23% last year. In addition, a decrease has been noted in the total dollar balance of Direct Loans delinquent for over 31 days, from 17.2% to 15.9%.
Decreases have also been seen in the number of borrowers in deferment and forbearance. Deferments currently account for less than 12% of outstanding Direct Loan volume and less than 8% of outstanding FFEL Program volume. The most common reason for this remains that borrowers have returned to school.
Loans in forbearance have also seen a drop, currently representing only 10.5% of Direct Loan volume.
The Obama Administration has announced additional efforts to help student loan borrowers, including a streamlined process to identify individuals on active military duty with FFEL Program student loans who are eligible for lower interest rates. The process is already in use by the Department for service members with Direct Loans.
In addition, the administration is working to require guaranty agencies to help FFEL Program student borrowers who are rehabilitating their defaulted loans by making them aware of various repayment plans available to them, such as the income-driven repayment plan.
The administration is also working on a Student Aid Bill of Rights, which would promise process improvements and protect student loan borrowers.