About 1 in 7 borrowers default on their federal student loans within just three years of beginning to repay them.
President Barack Obama's administration is launching a new website that clearly outlines income-based repayment plans. It provides personalized repayment plans so Americans can pick what best suits their needs.
Administration officials say income-based repayment plans can slash monthly payments. They extend the repayment period from 10 years to 20 years. Remaining balances of federal loans will be forgiven after 20 years.
Education Secretary John King said the goal is to enroll at least 2 million more borrowers in repayment plans. He told reporters on a conference call that he is still paying back loans that he took out in graduate school. King said the goal is to protect consumers' credit.
Defaulting can damage credit, making it difficult to obtain other types of loans.
More than 40 percent of Americans who borrowed from the government’s student-loan program aren’t making payments or are behind on payments, raising worries that millions may never repay.
Federal student loan debt now exceeds $1.3 trillion.