Income-Driven Repayment: Who's Using it--and How COVID-19 Could Change the Landscape   [open pdf - 0B]

From the Document: "Although fixed-payment, mortgage-like student loan repayment plans were the norm for decades, income-driven repayment (IDR) has become an increasingly popular option for borrowers since the Great Recession. Today, over six million federal borrowers are enrolled in income-based repayment programs. These programs allow students to make loan payments based on their income, with monthly payment amounts decreasing if income decreases. A recent examination of nationally representative data on IDR borrowers found that: [1] Borrowers with more than $50,000 in student loan debt are more likely to participate in IDR; [2] Borrowers in households earning under $12,500 per year are less likely than borrowers with larger incomes to enroll in IDR; [3] Borrowers with 'some college, no degree' or a two-year degree are more likely to participate in IDR than those with a bachelor's degree; [4] Women and borrowers of color are more likely than men and white borrowers to participate in IDR; and [5] Enrollment in IDR is not linked with other financial behaviors like savings, homeownership, or retirement. Due to economic uncertainty created by COVID-19 [coronavirus disease 2019], the number of federal student loan borrowers who opt into IDR--as well as the cost of administering these programs--will likely grow substantially. As policymakers consider how to support and sustain IDR programs, this policy brief offers insight into who is benefiting from them, who is not, and how the landscape may change."

Third Way
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