Association for Public Policy Analysis & Management

In this paper, “Do Income‐Driven Repayment Plans Help Low‐Balance Borrowers? Examining the Options for Community College Students,” a researcher from the Association of Community College Trustees, will explore the array of federal repayment options for student loan borrowers struggling to repay their balances. While these plans are more targeted to individuals with high debt balances and low to moderate incomes, research has shown that low‐balance borrowers have higher default rates than their high‐debt peers. It is unclear if low‐balance borrowers are not using income‐driven repayment (IDR) plans because they do not qualify or due to other factors. This research focuses on community college borrowers, who often leave school with low debt balances. Using data from the College Scorecard – to which several federal data sources contribute data: Institutional information is derived from the National Center for Education Statistics’ Integrated Postsecondary Education Data System (IPEDS), the Office of Federal Student Aid’s National Student Loan Data System (NSLDS), and the Treasury Department – this research will examine if community college borrowers qualify for IDR plans, how these results differ for different subgroups, and compare their repayment options. This paper also touches on ways in which the federal loan repayment system can be reconfigured to be more applicable to low‐balance borrowers, creating a more equitable, efficient student loan ecosystem. Research questions include: (1) How much do students at community colleges borrow, and what is the distribution of debt within colleges? (2) How much do community college students earn after enrollment, and how much do these earnings change over time? (3) Do community college students qualify for income‐driven repayment (IDR) plans, and how do their payment amounts differ across plans? and (4) How do the results of these analyses differ for various subgroups?