Report: Federal income-driven repayment ‘built to be a debt trap’

  • The federal government’s systems that allow student borrowers to repay loans based on their income are flawed and can end up saddling them with more debt, a new report argues. This can affect borrowers’ financial health and well-being, it says.
  • While debt under these income-driven repayment plans can theoretically be forgiven after 20 to 25 years, it seldom is, according to the research, published by the Student Borrower Protection Center, a Washington D.C.-based advocacy organization.
  • It calls on the U.S. Department of Education to stop adding unpaid interest to the principal of these loans, among other changes to the model. Continue reading.