Recommendation: To help ensure that Income-Based Repayment, Pay As You Earn, and Public Service Loan Forgiveness serve their intended beneficiaries to the greatest extent possible, the Secretary of Education should take steps to consistently and regularly notify all borrowers who have entered repayment of income-driven repayment plan options, including Income-Based Repayment and Pay As You Earn.

Agency: Department of Education
Status: Open

Comments: The Department of Education generally concurred with our recommendation, stating that it is committed to ensuring that federal student loan borrowers have the information they need to manage their debt, including details regarding income-driven repayment plans and loan forgiveness programs. However, Education stated that it is not clear that providing information on repayment options to all borrowers is the most efficient or effective way to achieve this goal. Beginning in 2015, Education directed its loan servicers to start sending detailed income-driven repayment information, such as projected monthly payment amounts and total amounts paid over the life of the loan under each plan, on a quarterly basis to all borrowers who are in school or in the 6-month grace period after leaving school. Education reported that in 2016 its loan servicers also began sending an email to borrowers in the fifth month of their grace period with information about applying for income-driven repayment plans and Public Service Loan Forgiveness. Education also reported that in December 2016 it began sending emails about the Revised Pay As You Earn plan directly to certain groups of borrowers, including those who expressed interest in income-driven plans during exit counseling, were less than 227 days delinquent, or had Federal Family Education Loans. In August 2018, Education indicated that borrowers are notified about income-driven repayment through information posted on websites; billing statements and forbearance and deferment notices; and during various points of delinquency. We acknowledged these efforts in our 2015 report and discussed their limitations. For example, while Education provides detailed information about income-driven repayment on its website, borrowers must actively seek out this information. In addition, we reviewed recent sample billing statements for each of the Department's loan servicers and found the information on income-driven repayment limited to the names of the specific repayment plans. The statements did not include information about how the plans work or eligibility requirements. Additionally, Education reported that in June 2019 it began sending emails about income-driven repayment plans and Public Service Loan Forgiveness directly to certain groups of borrowers, including those in the Standard repayment plan who were 31 to 270 days delinquent or in a discretionary forbearance. While a positive step, these emails were only sent to select groups of borrowers. We maintain that borrowers need sufficient and timely information to ensure they are aware of and can make informed decisions about repayment options. To fully implement this recommendation, Education should consistently and regularly notify all borrowers who have entered repayment about income-driven repayment options, including borrowers who have not been contacted by Education through its targeted notification efforts.