The Department of Education is launching a new initiative this fall to make struggling student borrowers aware of the various federal repayment and forgiveness programs available to them.
Donya Nasser thought she had maxed out on federal student loans going into her freshman year of college. Unaware that her mother was eligible for a federal Parent PLUS loan, Nasser took out a private loan for $14,000.
"We ended up getting a private loan because we just didn't understand the process, because my mom hadn't gone to college before," says Nasser, a junior at St. John's University.
Nasser learned a year later that her mother could have taken out a federal Parent PLUS loan at a much lower interest rate, a miscommunication that will likely cost her thousands of dollars.
The Department of Education is launching a new initiative this fall to help students like Nasser avoid those types of missteps. In this case, the Obama administration will be focusing on the other end of the process: repayment.
The department will soon begin proactively reaching out to struggling student borrowers to make them aware of the various federal repayment and forgiveness programs available to them.
"Even as we work to bring down costs for current and future students, we have got to offer students who already have debt the chance to actually repay it," President Obama said during a speech at the University of Buffalo in August, when he announced an array of policy initiatives to lower the cost of college.
There are currently about 1.6 million students enrolled in income-based repayment programs, which allow borrowers to pay back their loans as a percentage of their disposable income. At the same time, 2.1 million borrowers are in default, many of which might have been eligible for a federal program.
"I think a big majority of students don't know about paying back their loans or programs that are out there because we never see the information on campus," says Joshua Carter, a junior at the University of Texas at El Paso who will graduate with $30,000 in loans.
Greg Young, a 28-year-old doctoral student at the University of Buffalo, was thinking about applying to a federal repayment program after he graduated from the College of Saint Rose in 2007.
"Frankly, I was really confused in trying to figure out which one was the best, and I wasn't sure where I could get some advice on it," he says.
Young was able to defer his loans because he went back to school, but will probably need a federal repayment program to help pay off his $40,000 of debt.
"I think this education campaign is really great because I don't think the information is out there," Young says about the Obama administration's new outreach.
Betsy Mayotte, director of regulatory compliance at the non-profit American Student Assistance, says that informing borrowers about repayment options is only half the battle.
The process of applying to a repayment program can be cumbersome, she says, and the Department of Education simply doesn't have the resources to guide everyone through it.
Nasser says she might want to apply for a repayment or forgiveness program but doesn't have the "slightest clue" where to start.
"Especially if you are a first-generation student, you don't ever go through a workshop that explains to you, this is how you are going to pay for college," she says.
By being proactive instead of reactive, the Department of Education hopes to help struggling students avoid defaulting or paying more than is necessary.
Mayotte just hopes the e-mails and phone calls don't get lost in transmission.
"Borrowers that are past due get a ton of phone calls and they get a ton of mail, and a lot of the time they don't answer the phone and they don't open the mail," Mayotte says.
Jonathan Dame is a senior at Boston College.