The U.S. Department of Education could do more to make sure college students are aware of their options in repaying loans, an August Government Accountability Office (GAO) report found.

According to the numbers, the GAO found that students’ loans were higher than they should be due to a lack of awareness about available programs. The report was created to review options on how to help borrowers repay loans. http://www.gao.gov/assets/680/672136.pdf RB

According to the report, in 2012 the Department of the Treasury estimated that 51 percent of Direct Loan borrowers could lower their payment through Income-Based Repayment (IBR). RB

IBR is a plan created by the Department of Education that allows students to retool and reduce their debt payment if students are earning less than anticipated immediately after graduation. The plan limits monthly payments to 15 percent of a graduate’s discretionary income. http://www.finaid.org/loans/ibr.phtml RB

IBR is calculated through the “repayment estimator” on the Federal Student Aid Office’s website. By entering loan and interest payment, tax filing status and income, the estimator shows what an IBR plan would cost, compared to a standard graduated student payment plan.RB

There is also a “Pay As You Earn” plan that caps monthly payments at 10 percent of a student’s discretionary income.RB Additionally, the Public Service Loan Forgiveness program allows those with loans to get rid of debt by working in a public service job, provided they make their first 120 monthly payments.RB

However, only 13 percent of eligible borrowers utilize the IBR plan and two percent use the Pay As You Earn plan, according to the GAO report.RB

The Government Accountability Office criticized the Department of Education for failing to promote the programs.

The Federal Reserve Bank of New York in 2013 reported 38 million Americans collectively owed more than $1 trillion in student debt. http://gflec.org/wp-content/uploads/2015/01/a738b9_b453bb8368e248f1bc546bb257ad0d2e.pdf RB

Walter McMahon, a professor of Economics, said the amount of student loans is concerning.

“It is time to not go any further in that direction,” he said.

Katherine Cawley, a graduate student in Library and Information Sciences, said the rate was alarming.

“That’s way too much,” Cawley said. “I think that college should be something that should be affordable, right?”

Dan Mann, director of the Office of Student Financial Aid, said about 40 percent of University undergraduates took out loans last year.

The University’s Division of Management Information reported the average University student has $24,657 in debt, as of 2011. The 2012 national debt average for a Bachelor’s degree was $29,384 according to a report by Edvisors.RB

The University’s Office of Student Financial Aid does provide links on their website to the alternate payment plans such as IBR and the Pay As You Earn plan.

The office’s website states a default on a federal student loan will incur additional costs, such as collection costs, attorney’s fees, court costs and additional interest — leading to an increase in the monthly amount owed.http://osfa.illinois.edu/types-of-aid/what-to-know-before-borrowing RB

“The Office of Student Financial Aid identifies former University of Illinois students who do not begin repayment or become delinquent in making their payments and contacts them to let them know that we are available to help them with their loan repayment questions and will try to help them avoid default,” Mann said.

A default can also result in a denied or revoked professional license, such as one for medicine or law.http://www.osfa.illinois.edu/types-of-aid/what-to-know-before-borrowing RB

About 14 percent of borrowers defaulted within three years of beginning payment, the Department of Education reported in September 2014. http://www.gao.gov/assets/680/672136.pdf RB

The Office of Student Financial Aid also has a “What to Know Before Borrowing” section to let students know the pros and cons of taking out loans. “This information is designed to remind students to borrow wisely, understand the responsibility of borrowing and recognize the consequences of not repaying your student loans,” Mann said.

Despite the growing amount of loans, McMahon believes higher education is invaluable.

“The rate of return to investment in a four year degree nowadays is 14.1 percent for males, 12.8 percent for females,” McMahon said. “It’s a good investment, whenever you have an investment with a higher return than the cost of the loan or funds, it contributes to the growth of the economy and state and these individuals over a lifetime.”

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