Last week the U.S. Department of Education launched a new, mobile-friendly website StudentLoans.gov/Repay to help student loan borrowers identify good repayment options for their circumstances. The new website is easy to use on a smartphone – a great feature for those borrowers whose primary access to the internet is through their phones. And with just five clicks, it seems easy to figure out a borrower’s best course of action – whether that means getting out of default, reducing monthly payments through an income-driven plan like REPAYE, or accessing the Public Service Loan Forgiveness program.
It is great that the Department is working on new ways to provide borrowers with accessible guidance on repayment options, including mobile-friendly options like this. Unfortunately, the frustrating complexity of the student loan repayment system prevents this tool from being as simple and straightforward as it initially appears.
First, the seeming simplicity of the “five steps” to identifying a good repayment plan fades when you then click to “see all steps” to sign up for the recommended plan. You may find yourself then scrolling through as many as 15 steps to actually implement the plan. Additionally, these steps may include long waits (e.g., waiting for up to 24 hours for a FSA ID); significant decisions (e.g., “Decide whether you want to rehabilitate or consolidate your loans”), and lots of legwork that the Department should streamline (e.g., tracking down contact information for your servicer(s), and figuring out how to rehabilitate defaulted loans). Borrowers may find they need help in navigating these steps, and they should receive that help from their servicers – which are paid by the Department to provide exactly this sort of help. Unfortunately, the new website does not provide a phone number to call if a borrower has questions or wants guidance.
Second, the recommendations will not be appropriate or complete options for some borrowers. For example, there are no questions about having attended a closed school or having a disability – circumstances that would indicate the borrower should look into loan discharges. Perhaps more troublingly, for some borrowers the actions recommended will not be possible or could lead borrowers to lose valuable rights. For example:
- The website recommends that borrowers with older loans consolidate to access income-driven repayment plans, but fails to warn borrowers with Parent PLUS loans that they should not consolidate those PLUS loans with other loans because their resulting Direct Consolidation loan will actually be ineligible for the best income-driven repayment programs. See here for more information about how to handle consolidation if you have Parent PLUS loans and other federal student loans loans.
- The website appears to recommend that all borrowers with loans from prior to 2011 consolidate their loans – even borrowers who are current on their loans and are not looking for ways to reduce their loan payments (i.e., borrowers who seem to be doing fine!). But consolidating does not make sense for all borrowers with older loans. Downsides of consolidating may include losing the option to consolidate later to get out of default, losing credit for IBR payments made towards loan forgiveness, and the previously mentioned risk of consolidating Parent PLUS loans with other loans. See here for other “pros” and “cons” of consolidation.
Ultimately, the Department’s new repayment website is easy to use, but it cannot fully untangle the complexity of the current student loan landscape. Borrowers who use the new website to get started may therefore still want to use other resources like those on studentloanborrowerassistance.org and studentaid.ed.gov to find more information about their repayment options and how to implement them, and also to explore whether they are eligible to cancel their loans based on circumstances like disability, a school’s closure, or school misconduct.
