Driving Inequity: Are IDR’s Documentation Requirements Hurting Borrowers of Color?

Abstract

This report examines the role that the use of alternative documentation of income (ADOI) plays in driving racial disparities in access to Income-Driven Repayment (IDR) for student loan borrowers. In doing so, it underscores how breakdowns in IDR are a clear civil rights issue. In order to enroll in IDR, borrowers must document income and family size by either (1) providing a tax return or (2) work with their servicer to submit an ADOI. While there is no publicly available data on the IDR application process and resulting outcomes, research shows Black borrowers disproportionately struggle in paying back federal student loans than their white peers, contributing to disparities in delinquency and default. By drawing parallels between borrower experiences avoiding default in via IDR and the Home Affordable Modification Program (HAMP), the paper questions whether ADOI is providing a viable path for student debt relief for vulnerable federal borrowers.