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RELEASE: With Letter to IRS, Departments of Education and Treasury, Unlikely Allies Unite Around Multi-Year Income-Driven Repayment


October 12, 2016

CONTACT: Kyle Epstein, 202-481-8137

Washington, D.C. – Today, 20 organizations representing a range of student loan servicers and borrower advocates sent a joint letter today to the Internal Revenue Service (IRS), the Department of Education, and the Department of the Treasury, bringing attention to the need for a streamlined and simplified process of re-applying for income-driven repayment (IDR) each year. The letter calls for allowing borrowers to automatically re-enroll in these payment plans each year through increased information-sharing between agencies and the IRS. This would keep borrowers from facing avoidable financial penalties while also freeing up resources for loan servicers to focus on assisting individuals who need it most.

“As student advocates, we hear from borrowers all the time who are already struggling with repayment, and then they’re hit with additional fees because they failed to recertify for IDR,” said Maggie Thompson, Executive Director of Generation Progress. “This is such an easy fix for the Departments and the IRS to undertake, and they don’t even need Congress to pass any new laws. It would benefit both borrowers and servicers, and save the government needless paperwork.”

With some 24 percent of borrowers choosing to pay their loans back based upon their income, IDR plans are a crucial lifeline for student debtors. Yet some 57 percent of borrowers on IDR fail to re-enroll for these plans on time. When that happens, the consequences for borrowers can be significant. They will end up having to make monthly payments equal to what they would have had to pay to retire the debt in 10 years. Unpaid interest may get added to their loan balance. And if they are using direct deposit, these higher payment amounts could trigger overdraft fees.

Multi-year certification takes the danger out of IDR by ensuring that most borrowers can skip the paperwork traps and instead have their payment automatically adjust using tax data they already sent to the IRS. Not only do borrowers win under this proposal, but servicers will be able to better allocate resources toward at-risk borrowers, not those who simply need paperwork help to stay on IDR.

“Multi-year IDR is a commonsense policy that would significantly improve the chances of long-term repayment success,” said Ben Miller, Senior Director for Postsecondary Education at the Center for American Progress. “We know that borrowers could do it in the past, so we hope the agencies can recognize the current challenges borrowers and servicers face with recertification and make this overdue change.”

To read the letter, click here.

 For more information or to speak with an expert, contact Kyle Epstein at or 202.481.8137

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