Almost a quarter of college students who take out loans are expected to default within four years of leaving school, according to U.S. Education Department data. However, researchers at Georgia State University may have found a way to ease the default rate.
Daniel Kreisman is an assistant professor of economics at GSU. He and James Cox, the Noah Langdale Jr. Chair in Economics at the Andrew Young School of Policy Studies, found the majority of borrowers took out standard loans with 10-year fixed repayment plans. Kreisman said income-driven plans are a safer choice for most students.
“They tie your monthly repayment amount to your earnings,” Kreisman said. “So, if you earn very little, you don’t owe anything. If you’re unemployed, you don’t owe anything.”
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