Exploring the Relationship of Enrollment in Income-Driven Repayment to Borrower Demographics and Financial Outcomes

The Senate HELP committee is considering changes to income-driven repayment (IDR) schemes for student loans, necessitating research that examines the characteristics and financial behaviors of the borrowers in IDR programs. Using descriptive methods and a nationally representative sample, we examine the demographics of IDR enrollment. Contrary to the intention of the policy, we find that low-income borrowers and borrowers with high debt-to-income ratios are less likely to enroll in IDR. We also find that married women of color are likely to enroll in IDR programs as are borrowers with more than $50K in student loan debt. Finally, we find that enrollment in IDR does not predict engagement in other financial behaviors such as saving for retirement or buying real estate. The paper ends with a discussion of the implications of these findings for federal financial aid policy.