The U.S. Departments of Treasury and Education are partnering with accounting and tax software developer Intuit to raise awareness of income-driven repayment plans and other repayment options for federal student loan borrowers.
Under the agreement, Intuit’s TurboTax will encourage millions of users to explore their student loan repayment options, including checking eligibility for lower monthly student loan payments as they file their tax returns. In addition, 2014 tax refund envelopes will include messages on how student loan borrowers can lower their monthly payments.
The private-public collaboration aims to tell more student loan borrowers about options they may not know about for income-driven repayment plans, which allow borrowers to fully repay their student debt on a sliding scale that adjusts monthly payments based on factors such as changing income and growing families.
In recent years student loan debt has been overtaking other forms of indebtedness, such as credit card and mortgage debt, as young people struggle to cope with paying back their loans with low-paying jobs.
This tax filing season, Intuit will feature a banner in its TurboTax Online tax preparation software with a message to let users know they have options for repaying federal student loans. The banner will link to the Department of Education’s online Repayment Estimator, where users will be able to determine if they could lower their monthly student loan payments through an income-driven repayment plan. From there, users will be able to sign up for an income-driven or other repayment plan. Last year, more than 18 million Americans used TurboTax Online to prepare their taxes.
“We are excited to be collaborating with the Department of Treasury and the Department of Education on such an important issue, student loan repayment,” said Intuit president and CEO Brad Smith in a statement. “At Intuit, our purpose is to improve an individual’s financial life so profoundly that they don’t go back to the old way of doing things. This collaboration fits right in with the purpose and is aimed to help all individuals, especially Intuit customers, become aware of and become empowered to take control of their student loans.”
The effort is part of President Obama’s broader agenda, announced last August, to combat rising college costs, make college more affordable, and improve value for students and their families. The President called for the Department of Education and the Department of the Treasury to partner together to increase consumer awareness of repayment options, and this new collaboration is a response to his call.
In addition to the TurboTax collaboration with Intuit, the Treasury and Education Departments will also include a message on the back of envelopes containing this year’s tax refund checks to raise awareness of federal student loan repayment options. Approximately 25 million of these envelopes will be mailed to tax filers in the 2014 tax season.
“While the Obama Administration is working to expand access to higher education and make earning a college degree more affordable, rising levels of student debt mean that we must continue to provide student borrowers with the tools they need to successfully repay their loans,” said Treasury Secretary Jacob J. Lew in a statement. “Tax-filing season is an opportunity for borrowers to take a big-picture look at their personal finances and check their eligibility for repayment options, including income-driven plans, and enroll in one that meets their family’s needs. Our collaboration with Intuit Inc. will help the Administration reach millions of tax filers with that message.”
Beginning in 2009, federal student loan borrowers have been able to enroll in an expanded set of income-driven repayment plans that cap their monthly payments at a percentage of their current discretionary income if their payments are made on time. The plans also extend the repayment timeframe to 20 or 25 years, and provide for forgiveness of the remaining student loan debt at the end of the repayment period.
In 2010, President Obama signed into law an income-driven plan for federal borrowers that would lower this cap to 10 percent of discretionary income for students who first take out loans after July 1, 2014. Then, last October, the President announced an executive action to make that lower cap available to more borrowers by the end of 2012, rather than 2014, which has further reduced monthly student loan payments for millions of responsible borrowers.
“As student loan borrowers file their taxes this year, I’m pleased that many of them will have an opportunity to determine if they can lower their monthly student loan payments through an income-driven repayment plan,” U.S. Secretary of Education Arne Duncan said. “Too many borrowers are struggling to pay back their student loans, which is why this collaboration aimed at sharing information about income-driven repayment plans is so important. Building on ongoing outreach efforts, the Administration will continue to work to ensure that borrowers are aware of their options that can help them responsibly manage their student loan debt.”
The Department of Education has undertaken efforts to ensure borrowers are informed about the various repayment options. For example, the Department of Education has provided new resources to better equip financial aid counselors and has revamped exit counseling for students who are about to graduate. The Department of Education has also initiated new outreach to federal student loan borrowers, including emails targeted to specific borrowers who may be likely to benefit from an income-driven repayment plan or who may not be aware of their choices for repayment.
For more information on income-driven plans, and other repayment options, visit http://studentaid.ed.gov/repay-loans/understand/plans. To use the Repayment Estimator, visit http://studentaid.gov/repayment-estimator.