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Student loan repayment is so complicated, even a top expert can't figure it out

Trying to enroll in income-based repayment can be complicated.
Trying to enroll in income-based repayment can be complicated.
Libby Nelson is Vox's policy editor, leading coverage of how government action and inaction shape American life. Libby has more than a decade of policy journalism experience, including at Inside Higher Ed and Politico. She joined Vox in 2014.

Here's how confusing it can be to pay back a student loan: even the person who shaped the federal student aid system can't figure it out.

Former Education Department official Bob Shireman recently wrote at the Huffington Post about helping his niece pick a student loan repayment plan.

He recounts a baffling series of steps to enroll in income-based repayment, the federal plan with the lowest monthly payments. It's not listed as an option early on in the email from a loan servicer. He had to scroll down in order to find it, and then pick from four PDF forms for four different income-based plans.

This was a totally unnecessary hurdle, because all of the forms were the same. Shireman's niece never found out how much her payments would be under an income-based plan, even though an Education Department calculator makes that information accessible. Nor was she told that a government website,, offers a much simpler process for enrolling in income-based repayment plans.

Shireman's struggle to help his niece is significant because he isn't just any former official — he's arguably had more influence than anyone else over federal student aid policy. An early higher education policy adviser for President Obama, he led a successful effort to change the federal loan program in 2010, when the Education Department began making student loans itself rather than relying on banks to lend federal money. As the head of an advocacy group, the Institute for College Access and Success, he laid the groundwork for the adoption of income-based student loan repayment.

Almost nobody understand federal student aid better than Shireman, and few people have done more to shape the system.

So his confusion doesn't bode well for the recent college graduates and dropouts who have to figure out the system on their own. (Need help picking a plan yourself? Vox has created an interactive guide on how to choose a student loan repayment plan.)

How to simplify student loan repayment

The system is so complicated partly because there are a lot of options for paying back student loans, created at different times with slightly different enrollment criteria.

While the federal government makes the loans, it relies on private companies, known as loan servicers, to do the rest of the work during a loan's life cycle, including enrolling borrowers into repayment plans and ensuring stay on top of their payments. Shireman said when the system was designed, keeping the private loan servicers in the mix was meant to create competition for the most cost-effective and borrower-friendly business practices. Now he's having second thoughts.

The most radical way to simplify student loan repayment would be to deduct student loan payments from paychecks, like we do for taxes or 401(k) contributions. Payments could be based on income, skipping the part where borrowers have to choose a confusing array of seven repayment plans.

But there are other suggestions that could make the process easier in the short term — such as letting borrowers pick their own servicer, aided by online reviews. The Education Department is taking steps to make customer satisfaction more important when it awards contracts to loan servicers.

The problem is that, unless you're a student loan expert like Shireman, you might not realize how unnecessarily complicated the process is, or that loan servicers could make it easier. Instead, you're just confronted with unnecessary hurdles.

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