The Chronicle of Higher Education reports that a technical glitch may be responsible for the low number of students who have applied for the new income-based repayment plan since it took effect on July 1st. The glitch (which I might even call a snafu, since the law creating this program passed in October of 2007) is that the Department's account repayment website doesn't include "Income-Based Repayment" as an option in their drop-down menu [Borrowers can download the form on the site and mail it in]. Hmmm..is it any surprise then that only 14,000 borrowers had applied (with 4,500 approvals) for the program. At a time when defaults are rising, IBR, which sets borrower payments based on income levels, was expected to provide some needed relief. With many recent graduates having difficulties in the job market and with many loans entering repayment in November, it sure would be nice to have that drop-down menu option added sooner rather than later.
As for the reason for this delay:
"A department spokesman said the agency had planned to update the menu in September, but pushed back the date because of "resource limitations" at the department and its servicing contractor, ACS. In recent months, both entities have been consumed with expanding the department's loan-processing capacity to accommodate more loans and to prepare for a potential switch of all federal loans to the direct-lending program, the spokesman said."