Even before the national conversation about broad student loan forgiveness began, forgiveness was a core component of student lending in the US. Official forecasts (PDF) estimate that through income-driven repayment (IDR) programs, the federal government will forgive $207 billion of student loans over the next 10 years. But many borrowers who would be eligible for forgiveness still struggle to stay current on their loans, with more than five million in default and another three million behind on their payments at the end of 2019.

Current borrowers can have their loans forgiven through IDR programs, which require paying a fixed percentage of income—usually 10 percent—for 10–25 years, after which the government forgives the remaining debt. On the campaign trail, President Biden proposed to make this system more generous by reducing the share of income paid from 10 to 5 percent. But this proposal and others like it do little to address the fact that many borrowers who could benefit do not enroll in IDR and that for borrowers with low-incomes, holding an ever-growing debt balance for decades can be a financial and psychological burden, even if that debt is eventually forgiven.

Borrowers need more help accessing affordable repayment plans

An opt-in system of IDR cannot protect borrowers from unaffordable payments if they don’t know about it, and most college students are unaware IDR exists. In 2015–16, only 43 percent of undergraduates with loans reported being aware of IDR. That number was slightly higher among four-year undergraduates but still short of a majority (49 percent, compared with 39 percent of first-year students).

It may not be surprising, then, that when borrowers have trouble making payments because their incomes are low, they are more likely to not make payments at all than to use IDR. In addition to borrowers who are delinquent or default on their loans, millions more choose deferment or forbearance options that allow them to stop making payments but don’t count toward forgiveness.

Proactive outreach to borrowers from the moment students take their first loan can help raise awareness, as can more effective outreach by servicers. But even when borrowers know about IDR, the process of annually recertifying income can present a barrier, particularly for borrowers experiencing poverty or other forms of significant stress. If IDR is going to be an integral part of the student lending system, policymakers should consider making it the default option or automatically enrolling some or all borrowers.

Loan payments could be made automatically through tax-withholding systems so payments adjust with income and job changes without requiring any action by the borrower, as is the case in Australia and England. Short of such a fully automatic system, policymakers could experiment with automatically recertifying IDR participants using their annual tax data, or they could make more frequent adjustments to payments using earnings data collected by the US Social Security Administration or unemployment insurance agencies.

For some borrowers, 20 years is too long to wait for forgiveness

IDR is an elegant solution in theory, but the version in current policy can be demoralizing for many borrowers. Imagine a low-income borrower with $10,000 of debt who is not required to make any payments. This person will have to recertify their income 20 times, and by the time the debt is forgiven, the $10,000 initial debt will have grown to more than $17,000 at current interest rates. And if Congress doesn’t change the policy, this will be treated as taxable income.

It’s not hard to understand why borrowers may not stay in or never enroll in such a system. Watching your balance increase even as you make payments is more the rule than the exception; the median borrower in IDR who started paying in 2012 owed more than their original balance (PDF) five years later.

Borrowers who are clearly never going to repay their loans—such as those who never completed a credential and have experienced multiple years of low incomes—should not have to complete paperwork proving they are poor every year for two decades. Providing more immediate forgiveness would spare borrowers this headache and save taxpayers money trying to collect loans that will eventually be forgiven anyway.

But borrowers who can afford to pay off some but not all of their accruing interest each month may also find it demoralizing to watch their balances grow, even as they dutifully make the required payments. For these borrowers, providing partial forgiveness over time, rather than all at the end, could be a way to encourage successful participation in IDR. For example, interest could be waived for the lowest-income borrowers so their balances never increase, or a share of the principal could be forgiven after each year of successful IDR participation.

The fundamental tension in IDR lies in having a policy that makes sense for both low-income and relatively high-income borrowers. Policy design features such as interest rates and a long repayment term are needed to keep higher-income borrowers with large debts from gaming the system and getting big handouts, but these same features are punishing, demoralizing, and often unnecessary for low-income borrowers.

The current system, with its largely consistent set of rules for all borrowers, has gotten increasingly generous for doctors and lawyers with $200,000 in debt while continuing to fail struggling borrowers, many with small debts and no degree. For IDR to be an effective part of the solution, significant structural changes are needed to both how payments are collected and how loans are made. These range from automatic collection of payments to ending blank-check borrowing to graduate students, the kinds of wonky reforms that don’t win elections but are needed if student loans are to be an equitable part of US higher education.