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Student Loan Initiative


Student Loan Initiative
Policy Pulse: Economic Advancement
Over the past several years, the U.S. Department of Education and Congress have made important policy changes to the federal student loan repayment system.

These include:

  • Making enrollment and re-enrollment in income-driven repayment (IDR) plans (payments based on income and family size) easier through data sharing between the Internal Revenue Service and the Education Department.
  • Eliminating most instances of interest capitalization, or unpaid interest added to the principal, in IDR.
  • Revising IDR plans to be more affordable and limit balance growth
  • Allowing borrowers with loans in default a “fresh start” at the end of the three-year COVID-related payment pause payment pause that will end in the fall of 2023
  • Awarding new contracts to federal loan servicers.

But much work remains to ensure that borrowers fully benefit from these new policies, especially those who struggle to repay their loans. And people who find the repayment system overwhelming and have their loans fall into default often end up in a cycle that is difficult to escape and is damaging to their financial well-being.

The Pew Charitable Trusts’ student loan initiative seeks—through research, analysis, and engagement—to promote successful repayment of student debt among those most at risk of default and delinquency, and to continue to help improve the federal student loan repayment system. The initiative also seeks to better understand why many veterans borrow to fund their education despite having access to the robust post-9/11 GI Bill.

The Critical Issue of Student Loan Default

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Federal student loan default—when a payment is not made for 270 days or more—can have serious consequences, including affecting a borrower's credit score, financial stability, and overall economic well-being. Before the pandemic, nearly 1 in 5 borrowers had a defaulted loan.

Circumstances Driving Student Default

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A survey from The Pew Charitable Trusts shows that approximately one-third of federal undergraduate student loan borrowers reported experiencing default at some point over the past two decades. Among borrowers who experienced default, nearly two-thirds had a loan default more than once. Understanding the circumstances that may make borrowers particularly vulnerable to repayment challenges can help prevent such barriers in the future.

Federal Student Loan Repayment Basics

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After a more than three-year pause on repayment, the federal student loan system is back online. Today more than ever, it is crucial for borrowers to be well-informed about the changes ahead. The following articles highlight information borrowers need to know and offer guidance on navigating the resumption of payments and transitioning from default back into repayment—all of which will promote future student borrower success.

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