From the U.S. Government Accountability Office, www.gao.gov Transcript for: Student Loan Repayment Options Description: Audio Interview by GAO staff with Melissa Emrey-Arras, Director, Education, Workforce and Income Security Related GAO Work: GAO-15-663: Federal Student Loans: Education Could Do More to Help Ensure Borrowers Are Aware of Repayment and Forgiveness Options Released: September 2015 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from U.S. Government Accountability Office. It's September 2015. Millions of Americans rely on federal student loans to help finance their education, but outstanding loan debt now exceeds 1 trillion dollars. Further, about 14 percent of borrowers default on their loans within 3 years of entering repayment. A team led by Melissa Emrey-Arras, a director in GAO's Education, Workforce and Income Security team, recently reviewed options intended to help borrowers manage payments or obtain loan forgiveness. GAO's Jacques Arsenault sat down with Melissa to talk about what they found. [ Jacques Arsenault: ] Hi Melissa, thanks for joining me today. [ Melissa Emrey-Arras: ] Thanks for having me here, Jacques. [ Jacques Arsenault: ] One trillion dollars of student-loan debt, that's a lot of money. Can you give some perspective on student loans and what it means for borrowers? [ Melissa Emrey-Arras: ] Sure, I would want to preface it by saying that millions of students and their families benefit from these federal loans. It is because of the existence of these loans that they can actually go to school in the first place, so they do very much serve a helpful purpose in that way. On the other hand, students often struggle after they go to school in repaying those loans, and as you mentioned there is one trillion in student-loan debt out there, and one in seven borrowers are, in fact, defaulting on their loans within the first 3 years. So that's troubling, and so I think that's why this is an issue that we thought merited us looking at it in this report. [ Jacques Arsenault: ] So then, what options do borrowers have to help deal with this debt? [ Melissa Emrey-Arras: ] The Department of Education actually has several programs that can assist borrowers by, for example, setting lower monthly payments based on their income and family size, or potentially even forgiving the remainder of their loan balance if they've been in public service for 10 years. And by public service, I don't mean just by working in a state or federal job. You can also qualify by working in a non-profit, so those are some great options for people that the Department of Education offers, and that's what this report really delves into. We looked at participation in those programs and the characteristics of borrowers, and what's interesting is we found that not as many people are taking advantage of these programs as you might expect. [ Jacques Arsenault: ] So why is it, that they're not taking advantage and using these programs? Is it a lack of awareness on the part of borrowers or is there something else going on? [ Melissa Emrey-Arras: ] That's an excellent question. We know for the income-based repayment programs that Education has reported that not all borrowers are aware of the options available to them, and that is something that we've found as well. We talked with borrowers who said in some cases that they had to do their own research to find out what was available, and they weren't aware from the beginning. And part of that also has to do with the fact that the Department of Education does not routinely notify people when they start repaying their loans about those options. So they may not be aware of them and may not then participate in them. [ Jacques Arsenault: ] So then how can the Department of Education improve these programs? [ Melissa Emrey-Arras: ] We really focused on this awareness angle, and one of the things that we recommended to the department was that it systematically notify all people who are beginning repayment about these income-based repayment plans. People who have lower incomes can definitely qualify for these programs, and significantly save money; they could save thousands of dollars by participating. So that's one of the things. The other thing was that, for the Public Service Loan Forgiveness Program, this is a program that's going to start officially in 2017, and at that point everyone who’s worked in public service for 10 years can have their loans taken care of. And at that point, you know, people will be able to fully benefit. But in the meantime, people have this wonderful opportunity to get their paperwork in order and make sure that their employment and loans qualify and sort of get the ball rolling so that when 2017 rolls around, they're all set and can have their loans discharged. Yet, the Department of Education doesn't know if everyone is aware of this option, which will make it very difficult for folks to potentially benefit from it. [ Jacques Arsenault: ] And finally, for those who might be struggling with their own loans and for Americans with loans in general. What would you say is the bottom line of this report? [ Melissa Emrey-Arras: ] I think the bottom line is that if you or someone in your family has a student loan, I would strongly recommend that you find out what you're eligible for. You may be eligible for much lower payments that could potentially save you thousands of dollars. If you're working in a government job, or if you're working at a nonprofit and you've been there for ten years, you could potentially have the whole balance on your loan forgiven in 2017. So I would say make sure that you're aware of what's available and take advantage of what can help you. [ Background Music ] [ Narrator: ] For more, visit gao.gov, and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional watchdog agency, the U.S. Government Accountability Office.