Pilot Program Makes Great Strides In Increasing Income-Driven Repayment Applications

By Erin Timmons, Communications Staff 

In a June Memorandum President Obama announced that, in addition to the planned expansion of the Pay As You Earn (PAYE) repayment option, the administration would be taking a number of other actions to help borrowers who are potentially at greater risk of defaulting on their loans. The memo went on to explain that improving loan counseling was chief among the administration's priorities and tasked the Secretary of Education-- and Secretary of the Treasury, where appropriate-- with developing and implementing new strategies to get information about repayment options into the hands of the students who need it most.

Over the last 10 months, the Department of Education's (ED) office of Federal Student Aid and the White House's Social and Behavioral Sciences Team have been working on an email campaign to do just that.

Launched in November 2013, the campaign consisted of sending targeted emails to borrowers who were not current on their student loan payments, were carrying above-average debt, were at the end of their grace period, or had deferred or entered forbearance due to job loss or financial hardship. 

Emails used in the campaign were designed using insights gleaned from behavioral sciences data on borrowers who had been in delinquency for 90-180 days. "These e-mails indicated income-driven repayment eligibility criteria, the benefits associated with taking action and the costs associated with inaction, and the relevant web-links and servicer contact information," White House representatives said yesterday in a Homeroom blog post. “Behavioral science research demonstrates that timely, clear and low-cost informational messages of this kind can help citizens better understand their options, make more informed decisions, and follow through on their intentions.” 

The adminstration reports that, just one month after launching the pilot program, a four-fold increase was seen in the number of applications completed for income-driven repayment among borrowers who had been in delinquency for 90-180 days.

"We are working together to use insights from this trial to inform future communications and develop even more effective ways of reaching borrowers to help them stay on track," the Homeroom blog post said.


Publication Date: 8/22/2014

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