The number of federal direct student loan borrowers who were enrolled in an income-based repayment program rose by 20 percent in the last three months of 2013, as the Education Department launched a large outreach campaign to get more people to use the benefit.
Slightly more than 1.3 million borrowers had loans in an income-based repayment plan at the end of last December, an increase of 210,000 from the end of September, according to recently released federal data.
The increased participation in the program occurred as the Obama administration in November and December sent emails directly to more than 3.5 million borrowers that it believed could benefit from enrolling in the plans, which cap loan payments at a percentage of a borrower’s discretionary income and forgive any outstanding balance after 20 or 25 years.
During the same period, the number of borrowers participating in the similar but less generous income-contingent program remained roughly the same at 580,000.
Despite efforts by the Obama administration to better publicize and ease the application process for the income-based repayment program, enrollment remains relatively low compared to the overall federal direct loan portfolio, which includes 11.7 million people who are currently actively repaying their federal direct loans. An additional 5.5 million are in deferment or forbearance, and another 2.4 million direct loan borrowers are in default.
The Education and Treasury Departments planned to announce on Friday another aspect of the administration's campaign to enroll more borrowers in the programs. TurboTax will display a banner on its website that links to the Education Department's "repayment estimator," which provides information on enrolling in the programs.
The government will also include, during the upcoming tax season, a message about federal student loan repayment options on the envelopes of tax refund checks mailed this year. About 25 million of those envelopes will be mailed to tax filers this year, the departments said.
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