Student loan borrowers will soon have better options when it comes to paying off their debts.
The U.S. Department of Education announced Friday that federal student loan servicers now have more incentives to help keep students from defaulting on their loans.
Among these incentives are a customer satisfaction survey, which will serve as an indicator as to which servicer gets the most loans. The better the satisfaction scores, the more loans it may provide.
“All hard-working students and families deserve high-quality support from their federal loan servicer, and we are continuing to take steps to make sure that is the case,” said U.S. Secretary of Education Arne Duncan in a press release.
The plan, according to the announcement, is to encourage loan servicers to work with borrowers and keep them out of default. This change comes on the heels of skyrocketing student loan debt throughout the country.
The new servicer incentive is part of the larger Student Loan Forgiveness Act focused on limiting the monthly repayment amounts of former students.
The act guarantees students more payment options for their debts, including the Pay As You Earn program, which caps loan repayments at 10 percent of a person’s discretionary income. After 20 years of steady payment, the remaining debt is forgiven.
The second program, the Income-Based Repayment, requires 15 percent of a payee’s discretionary income. The remaining debt is forgiven after 25 years.
Earlier this year, the White House announced that it held $1.1 trillion in student loans taken out by approximately 40 million people. That’s $125 billion more than at the same time last year, according to the report.
Roughly eight million of those people are in default status on their loans. For UNM, about 10 percent of student loan borrowers defaulted on their loans in 2011, according to the Department of Education.
Lexi Schuman is one of the 500 borrowers in default. Schuman said she graduated in 2005 with degrees in chemistry and psychology, and she thinks she has $7,000 worth of loans in default, but she doesn’t know the exact amount — or even who owns her loans.
“It was sold to somebody and sold to somebody else, so I couldn’t even figure out who to pay for the last couple of years,” she said.
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Although Schuman cannot find the owners of her loan, they found her earlier this year when, Schuman said, she found out her federal tax return was taken to repay a portion of the loan.
“It was $2,300 taken to pay for loans — and I’m not even sure who the money went to,” she said.
Even if she figures out who owns her loans, Schuman said she probably wouldn’t be able to pay them back right now anyway.
Though Schuman said she’s happy she got the education she did, she has not been able to find a job in her field. Instead, she said that having a degree at all has gotten her some work, but not enough to keep her above the poverty line.
That makes repaying her student loan debt far less of a priority, she said.
“I have a million other bills to pay, and they’ll just take my tax return next year anyway,” she said.
Jyllian Roach is the editor in chief for the Daily Lobo. She can be reached at firstname.lastname@example.org or on Twitter @Jyllian_R.