Exploring IDR: A Comparison of Financial Situations and Behaviors Between Those in Traditional Student Loan Repayment and Those in Income-Driven Repayment

• In Event: 34.098 - Sheraton Roundtable Session Four - Osgoode Ballroom
  In Roundtable Session: 34.098-3 - College Expectations, Regional Compacts, and Income-Driven Repayment: The Role of Finances in Student Behavior

Abstract

This study examines differences that exist between borrowers enrolled in traditional-based (n=167) and those in income-driven repayment (n=136). Means tests indicate those in IDR earn less money, contribute less to monthly savings, have lower homeownership rates, and more. While those in IDR possess double the federal loan debt, monthly payments between the groups were equalized. Enrollment in IDR was influenced by gender, marriage, student loan debt, annual gross income, and living in an urban cluster. When controlling for loan debt and annual gross income, enrollment in IDR was not significantly correlated with “Never” Delinquent, “Bad” Credit, or Homeownership. Discussion links findings with previous research, making the case to dive deeper into individuals’ finances when debating the value of IDR.

Author

• Daniel A Collier, Western Michigan University