Resources / Reports / Automatic For the Borrower: How Repayment Based on Income Can Reduce Loan Defaults and Manage Risk

Automatic For the Borrower: How Repayment Based on Income Can Reduce Loan Defaults and Manage Risk

Published Mar 2014
ihep
focus area Need-Based Aid
download pdf

When borrowers default on a federal student loan, it can have catastrophic consequences. This paper by the RADD 2.0 consortium outlines the need for an automatic income-based repayment (IBR) system, measures the current IBR terms against these principles, examines ways to reduce administrative burdens and discusses the reasons for altering the current IBR formula when implementing auto-IBR.