• July 29, 2014

Glitch May Block Student Borrowers From Enrolling in Income-Based Repayment

A technical glitch may be discouraging some student-loan borrowers from signing up for an income-based repayment plan, consumer advocates and financial-aid administrators warn.

Income-based repayment, which allows borrowers to repay their loans as a percentage of their income as graduates, went into effect on July 1. But the Education Department's account-repayment Web site does not list the plan as an option on its drop-down menu, and will not until March.

A department spokesman said the agency had planned to update the menu in September, but pushed back the date because of "resource limitations" at the department and its servicing contractor, ACS. In recent months, both entities have been consumed with expanding the department's loan-processing capacity to accommodate more loans and to prepare for a potential switch of all federal loans to the direct-lending program, the spokesman said.

During the 2008-9 academic year, the federal government bought some $50-billion in loans from lenders as part of a program of emergency loan purchases designed to free up capital for new loans. Meanwhile, dozens of colleges switched to direct lending, increasing the size of the program by 50 percent. The direct-loan program could become even larger next year, if Congress passes President Obama's plan to eliminate the guaranteed-loan program.

While borrowers can enroll in income-based repayment by downloading a form from the Education Department's Web site and mailing it in, consumer advocates say the process is too complicated and is dampening participation in the new repayment program.

As of early September, 14,000 borrowers had applied for income-based repayment and 4,500 had qualified, according to the department.

Comments

1. sydella1210 - October 09, 2009 at 11:43 am

Wow and the want all loans to run through the same system, good luck to students getting funds next year. Maybe Congress should think before they vote...

2. heatherdunbar - October 14, 2009 at 09:23 am

It is unfortunately not a "glitch" that IBR's implementation has been delayed. It is part of a multi-corporate business strategy.

When ACS (which is *not* on the list of 4 approved ED loan servicers- Sallie Mae/ SLM Corp/UPromise, AES/ PHEAA, Great Lakes/ Deutschebank and Nelnet) is still under contract to answer the phones and serving as webmaster at FAFSA and Pearson/ Vangent (also *not* on the list of 4 approved ED loan servicers)is answering the phones in ED's central billing offices, virtualy or actually in Greenville TX, answering the phones for the Secretary of Education and the ED Ombudsmans Office, then there will be performance problems administering the Income-based Repayment program.

It is not that there is no unmet need. It is not that Congress did not think before they voted. It is a matter of who is actually in charge of admistering federal programs. It is the student lenders and collection agents that are calling the shotsm entirely in conflict of interest absolutely above the law.

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