Higher Education Experts Call for Fix to Student Loan Repayment Program to Address Surging Defaults

For questions or comments, or to set up a media interview, please contact:
Beth Maglione, VP for Communications, NASFAA, at news@nasfaa.org 
Colin Seeberger, Communications Associate, Young Invincibles, at Colin.Seeberger@younginvincibles.org 

Groups Call for Simplifying the Income Based Repayment Process

WASHINGTON, D.C. March 20, 2014—Today, a consortium of higher education organizations called on Congress to reform the overly complex repayment process for federal student loans by automatically enrolling all new borrowers in a single repayment plan based on income. Defaults among federal student loan borrowers have nearly doubled over the last five years and federal student loan delinquencies are at an all-time high.  

Consortium members HCM Strategists, Institute for Higher Education Policy, National Association of Student Financial Aid Administrators, New America, and Young Invincibles have studied federal student loan repayment challenges in depth over the past nine months. Their joint white paper Automatic for the Borrower: How Repayment Based on Income Can Reduce Loan Defaults and Manage Risk proposes a series of innovative fixes to streamline the repayment process, including:   

  • Reducing defaults by automatically enrolling all new federal student loan borrowers in a single repayment plan based on income;
  • Simplifying the repayment process by collecting payments through an employer withholding system; and
  • Ensuring schools provide value to students by instituting new institutional accountability measures based on students' ability to repay their debt.
"These proposals would simplify the repayment process and bring borrowers greater financial security," said Rory O'Sullivan, Policy & Research Director at Young Invincibles. "We know that post-secondary education leads to higher earnings and greater employability, so there's really no excuse for the defaults and delinquencies that we're seeing. The system needs to work better."

"These proposals would help prevent needless defaults and protect borrowers when life throws a financial curveball their way," says Jason Delisle, Director of the Federal Education Budget Project at New America. "We believe auto-IBR ensures a fair system of repayment, where struggling borrowers are protected but the vast majority repay their loans in full."

"Far too many students needlessly slip into student loan default despite the numerous safeguards like income-based repayment that would keep their loans current," said NASFAA President Justin Draeger. "Moving to a system of auto-IBR as proposed in this paper would prevent borrowers who are already facing monumental challenges from the added dire consequences of loan default. We're encouraged to have been part of the conversation around this idea."

"With almost three quarters of Americans supporting financial aid reform, it's time to act," said Kristin Conklin, founding partner at HCM Strategists. "By creating repayment protections for the neediest students and ensuring accountability for outcomes, these proposals meet a growing need for simplicity, transparency and shared responsibility."

The recommendations will be announced today at an event hosted by the Committee for Economic Development. This proposal is part of the Reimagining Aid Design and Delivery (RADD) project funded by the Bill & Melinda Gates Foundation. To read the recommendations in full, view the PDF report.   


The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at approximately 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every ten undergraduates in the U.S. Based in Washington, DC, NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit www.nasfaa.org.

About Young Invincibles 

Young Invincibles is a national organization committed to amplifying the voices of young Americans, aged 18 to 34, and expanding economic opportunity for our generation. Young Invincibles ensures that young Americans are represented in today's most pressing societal debates through cutting-edge policy research and analysis and innovative campaigns designed to educate, inform and mobilize our generation to change the status quo.

About IHEP 

The Institute for Higher Education Policy (IHEP) is a non-profit, non-partisan research organization based in Washington, DC, committed to promoting access to and success in higher education for all students, with a particular focus on populations that have been traditionally underserved by our postsecondary system. Celebrating its 20th year in 2013, IHEP develops innovative policy- and practice-oriented research to guide policymakers and education leaders, who develop high-impact policies that will address our nation's most pressing education challenges.

About HCM Strategists 

HCM Strategists, founded in 2008, is a public policy and advocacy consulting firm that works with clients to align, advocate for, and advance public policies that improve our nation's education and health.

About NCAN 

NCAN is an affiliation of hundreds of nonprofit organizations across the United States that help more low-income and underrepresented students enter and succeed in postsecondary education. We provide training, knowledge-sharing, benchmarking, and advocacy services so that nonprofits, K-12 schools, states, and colleges and universities can serve more students, more effectively and communities can enjoy the benefits of a better educated populace.

About The Committee for Economic Development (CED) 

The Committee for Economic Development is a nonprofit, nonpartisan, business-led public policy organization that delivers well-researched analysis and reasoned solutions to our nation's most critical issues. CED's work centers on the pursuit of seven core principles: sustainable capitalism, long-term economic growth, efficient fiscal & regulatory policy, competitive & open markets, globally competitive workforce, equal economic opportunity, and non-partisanship in the nation's interest. CED's research falls under four issue areas: fiscal health, education, global competitiveness, and democratic institutions. Learn more about CED online at www.ced.org.