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The U.S. Has a Really Helpful Student Loan Repayment Program—and No One's Using It

The U.S. Has a Really Helpful Student Loan Repayment Program???and No One's Using It
Photograph by Andersen Ross

The menu of repayment options available for struggling borrowers is a key benefit of taking out federal instead of private student loans, but new data show that many students aren’t taking advantage of the government’s programs.

The details come from the Consumer Financial Protection Bureau’s student loan ombudsman, Rohit Chopra, who posted an interesting breakdown of the $1 trillion in outstanding federal student loans. He found that two-thirds of all direct-loan borrowers are on the standard 10-year payment plan; the remaining third are in one of the special plans that are supposed to help borrowers manage their monthly payments. About two-thirds of those people are in plans that either extend the term of their loan or start the monthly payments small but increase them over time, or some combination of those options. They can make loans more affordable in the short term, but they increase how much total interest a borrower pays over the life of the loan.