Back in 2010 President Barack Obama announced the income-based repayment plan on student loans. The program allowed borrowers to “cap federal loan payments at 10 percent of income above a basic living allowance.” It’s a potentially very useful way for some graduates to reduce their student loan burden, but it turns out not many graduates are actually using it.

According to an article by Beckie Supiano in the Chronicle of Higher Education:

When the program began, in 2009, the timing seemed perfect. The economy had slumped, and student-debt levels were on the rise. Those concerns have only increased, but the program, despite its relevance, hasn’t become a household word.

But participation in income-based repayment remains low: About 475,000 borrowers were approved for the program by the end of last September. Since then both President Obama and the secretary of education, Arne Duncan, have raised its profile, speaking publicly about the program and introducing changes, such as fast-tracking a plan to lower the level of discretionary income at which monthly payments would be capped. By the end of April, more than 856,000 borrowers had been approved, according to the most recent estimates from the Education Department.

But about three million borrowers could probably improve their finances by participating in the program. So why aren’t they signing up? “One explanation, as the White House noted, is borrowers’ lack of awareness,” Supiano explained.

Well yes, but this has a lot to do with the fact that the program is incredibly difficult to use. Students are supposed to have “exit counseling” with their financial aid offices when they leave college. But at many schools this counseling session takes place online, so students just click through to the signature point. Many other students drop out of college, and so never have the student loan counseling session at all.

The other problem is that student loans don’t exist in some central repository. College graduates can’t just call up an 800 number and find out what their monthly payments are and then figure out what they could pay if they signed up for IBR. In most cases graduates’ interaction with their loans involves occasional phone conversations with student loan servicers (which have no interest in helping students reduce their payments).

Furthermore, once students actually figure out how to sign up for IBR the application usually takes several months for the Department of Education to process.

It might not be unawareness of the program, so much as frustration, that makes participation so low. The program has so many steps, requires so much interaction with unresponsive bureaucrats, and takes so long to complete, it’s almost as if they designed it to discourage involvement.

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Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer