WASHINGTON (CN) – President Barack Obama ordered the Internal Revenue Service to make it possible for student loan borrowers to import their federal tax information directly into Department of Education online loan repayment applications.
In a memorandum to Secretary of Education Arne Duncan and the Commissioner of Internal Revenue Douglas H. Shulman, Obama said too few borrowers are enrolling in income based repayment plans – which cap loan payments to 15 of the borrower’s discretionary income – because of the difficulty of applying for the program.
“For many borrowers, the most significant challenge in completing the IBR application has been the income verification process, which, until recently, required borrowers to provide a signed copy of their income tax return.”
The president also ordered Duncan to do a better job informing borrowers about repayment options through online and mobile marketing. Loan servicers will also be required to notify all of their borrowers about the income based program when they leave school and when they enter repayment.
The president mentioned several times that the administration was working on an enhanced income based repayment plan that would cap monthly payments at 10 percent of discretionary income and allow debt forgiveness after 20 years of regular payments.
According to the memorandum nearly two-thirds of college graduates borrowed to pay for their education racking up, on average, more than $26,000 in debt.