Student-loan borrowers applying to the federal government's Income-Based Repayment program will soon be able to provide their tax information with the click of a button, the Obama administration announced on Wednesday.
The change may seem technical, but officials say it will encourage more borrowers to enroll in the program, reducing the chance that they will default on their loans.
Starting in September, borrowers will be able to electronically transmit their tax data directly from the Internal Revenue Service into the application for Income-Based Repayment. Previously, borrowers had to contact their loan servicer first and then provide signed copies of their tax returns.
The change is part of a push by the Department of Education to get more borrowers to take advantage of the Income-Based Repayment program and make it easier for them to enroll. About 700,000 borrowers are currently on the plan, which allows them to cap their loan payments at 15 percent of their income.
But officials said that many more of the 35 million people with outstanding federal student loans may be eligible.
"We're absolutely convinced that a significant percentage of defaults will be averted simply by helping young people better understand their choices and make the right financial decisions," Secretary of Education Arne Duncan said in a conference call with reporters.
The Education Department also plans to develop an online tool to help borrowers track their debt, and it will work with colleges and loan servicers to better publicize the Income-Based Repayment program.