Income-based Repayment Tops Repayment Plan Choice For First Time
The latest data from the U.S. Department of Education show that more student debt is now being repaid through the Income-Based Repayment Plan (also called the Pay as You Earn plan, or PAYE) than any other repayment plan. Nearly one in three dollars in repayment is enrolled, totaling $188 billion out of $586 billion in repayment. More debt is enrolled in IBR than the automatic option borrowers are assigned when they begin repayment. (These figures are for the Direct Loan program only; repayment plan use in the now-defunct guaranteed loan program is not reported, but Direct Loans dominate the portfolio and all new loans have been made through this program since 2010.) The milestone comes after IBR experienced rapid enrollment growth in the past two years. In 2013 only about one in seven loan dollars were enrolled.
Is this good news or bad news? Probably a little of both.