Improving Repayment Options for Federal Student Loan Borrowers

This memorandum directs the Secretaries of Education and Treasury to streamline the Income-Based Repayment (IBR) application process for federal student loans by creating an online system that imports IRS income data directly, develop integrated online and mobile resources to educate borrowers about repayment options, and improve notifications about IBR availability to borrowers before and after leaving school.

Federal Register Open PDF 77 FR 35241

Impact dates

Jun 7, 2013
Model exit counseling module for higher education institutions
Sep 30, 2012
Streamlined online IBR application process with IRS income data import
Jul 15, 2012
Integrated online and mobile resources for student loan education; online financial literacy tool

Key directives

Create streamlined online IBR application with direct IRS income data import by September 30, 2012
Eliminate requirement for borrowers to contact loan servicer as first step to apply for IBR
Create integrated online and mobile resources for student loan education by July 15, 2012
Develop online financial literacy tool linked to actual federal loan data by July 15, 2012
Instruct loan servicers to notify borrowers of IBR option before leaving school and upon entering repayment
Make available model exit counseling module for higher education institutions within 1 year

Who is ordered

Timeline

Immediate

Secretary of Education authorized to publish memorandum in Federal Register

Near term (90d)

Integrated online and mobile resources due by July 15, 2012
Streamlined online IBR application process due by September 30, 2012

Long term

Model exit counseling module for higher education institutions due within 1 year
Enhanced IBR plan (10% cap) scheduled to take effect in 2014 per prior legislation

Risks & tensions

Implementation subject to availability of appropriations (Sec. 4(b)), creating potential funding uncertainty
Requires coordination between Education and IRS (Commissioner of Internal Revenue), which may pose interagency technical challenges
Document notes prior administrative difficulties with IBR uptake due to awareness and application barriers, suggesting implementation risk if streamlined process still fails to reach borrowers
Memorandum explicitly disclaims creating enforceable rights (Sec. 4(c)), limiting borrower recourse