A Consumer Finance Protection Bureau (CFPB) report maintains student loan borrowers continue to struggle while not taking advantage of affordable repayment plans.
The report revealed for borrowers the benefits of affordable payment options remain largely untapped, although nearly every federal student loan borrower has the right under federal law to make a monthly payment based on their income – known as Income-Driven Repayment (IDR).
The report authors said the investigative effort examined the performance of groups of borrowers who began to repay student debt between 2002 and 2011 while gaining a closer look at borrowers who, five years after entering repayment, were not paying down the principal of their student loan debt.
Research determined borrowers fell into two broad categories: those who have fallen behind on their student loans and are in poor standing and those who likely have made arrangements to keep up with their loan payments and are in good standing.
Report organizers said despite increases in the availability of affordable repayment options, the share of borrowers not paying down their balances who are delinquent on a student loan increased by 26 percent over the past 10 years.
IDR should be a financial lifeline accessible to borrowers, regardless of the amount of debt they owe or level of education they attain, report authors said, adding data reflects borrowers are struggling to benefit from programs designed to protect them from default while keeping their loans in good standing.