The U.S. Treasury Department and the Department of Education are working with H&R Block and Intuit this tax season to raise awareness of the income-based repayment options for federal student loan borrowers.
The federal government’s partnerships with Block and Intuit aim to encourage taxpayers with outstanding student loans to explore their repayment options and check their eligibility for lower monthly loan payments while they’re preparing their tax returns.
Block and Intuit are using their online tax preparation tools to share information about repayment options, including the President’s Pay As You Earn plan and the Department of Education’s Repayment Estimator with student loan borrowers. The Treasury and the Education Department began working with Intuit on the initiative last year and added Block this tax season as well.
While preparing their taxes online, users will be able to determine whether they can lower their monthly student loan payments through an income-driven repayment plan and then sign up for the repayment plan.
Income-driven repayment plans allow eligible borrowers to lower their monthly federal student loan payments to as low as ten percent of the borrower’s discretionary income. The Repayment Estimator enables borrowers to compare estimates of their monthly student loan payments, projected loan forgiveness where applicable, length of repayment, total interest, and total amount paid under all federal student loan repayment plans.
“Student loans help millions of Americans invest in themselves and contribute to the potential of our country,” said Treasury Department Deputy Secretary Sarah Bloom Raskin in a statement. “For students to make the best use of this investment requires arming them with information about flexible repayment options.”
President Obama signed into law an income-driven repayment plan In 2010 for federal borrowers that would lower the cap of a borrower’s monthly payment to 10 percent of discretionary income for borrowers who first take out loans after July 1, 2014. In October 2011, Obama took executive action to make the lower monthly payment amount available to eligible borrowers in 2012, rather than 2014 to make student loans more affordable for more borrowers by reducing their monthly student loan payments.
Intuit is continuing last year’s partnership with the U.S. Departments of Treasury and Education to present TurboTax’s online users with information about income-driven repayment options in the TurboTax product. In addition, for the first time, TurboTax will incorporate information about income-driven repayment options into a TurboTax newsletter to its customers.
“Intuit’s mission is to empower individuals to take control of their financial lives,” said Intuit chief tax officer David Williams. “We know that tax time is the perfect opportunity to evaluate one’s personal balance sheet and identify areas to improve one’s financial health. We are excited about partnering again to highlight these important loan repayment programs just one more way individuals can take control of their finances.”
H&R Block is also providing information to raise awareness about income-driven repayment options. This year, H&R Block is incorporating information about income-driven repayment options in tax tips accessible to users of H&R Block’s online tax preparation software and to visitors to the H&R Block website.
“We’re partnering with the Treasury and Education department because it’s the right thing to do,” said H&R Block president and CEO Bill Cobb. “Rising student loan default rates are a serious problem, but with our deep tax expertise, we’re in a great position to help people better understand their income-driven repayment options.”
In addition to improving awareness of income-driven repayment options, the Obama administration has taken several steps to help borrowers better manage their federal student loan debt. President Obama signed legislation lowering federal student loan interest rates for millions of students. He proposed improving college affordability for students and federal student loan borrowers by expanding and making the American Opportunity Tax Credit permanent. In his budget, the President has also proposed to simplify education tax benefits, exempt federal student loan debt forgiveness from taxation for qualified borrowers in income-driven repayment plans, and make two years of community college free as part of his America’s Promise proposal for responsible students.
The Obama administration is also supporting initiatives like the Treasury’s Financial Empowerment Innovation Fund to study decision-making as it relates to higher education, including the effects of providing students with estimates of their post-college salaries, and tech-based tool demonstrations to inform students about their financing options. These efforts complement the Department of Education’s ongoing work to expand the Pay-As-You-Earn income-driven repayment plan to millions of additional borrowers.
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