ECONOMIC REPORT OF THE PRESIDENT

Rate
16
Figure 5-12
Cohort Default Rates Over Time
14
12
3 Year CDR
10
8
6
4
2 Year CDR
2
0
2000 2002 2004 2006 2008 2010 2012
Note: Solid lines represent official rates while dashed lines are estimates by the Department of
Education. Through the fiscal year 2008, official cohort default rates were measured after two
years, after which they were measured after three years; during the transition period, estimates
for both time periods were provided.
Source: Department of Education
Bill of Rights reflecting the President’s vision that every borrower has the
right to quality customer service, reliable information, and fair treatment,
even if they struggle to repay their loans. And, in 2016, the White House
announced new actions to help Americans with student loan debt understand
their repayment options and to ensure they have access to high-quality
customer service, strong consumer protections, and targeted support to
repay their student debt successfully.
Providing More Flexible Repayment Plans
As described above, the constraint imposed by the standard 10-year
student loan repayment plan (in which students are enrolled by default) can
hinder debt management since it requires the same monthly payment at the
beginning of a borrower’s career, when earnings are lowest, as it does midcareer
when earnings are higher. This can create repayment difficulties and
dissuade students from investing in their education even when the investment
has large net benefits over a lifetime. In response, the Administration
has made payment plans more flexible and loan payments more manageable
through the expansion of income-driven repayment plans. These plans
increase flexibility in several ways. First, by expanding the period of repayment,
they allow borrowers to spread their student loan payments over a
longer period of time, while retaining the option of paying sooner with no
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