There's been some literature about changes in default settings for student loan repayment plans that could help borrowers avoid some major pitfalls. (https://goo.gl/sVNfVT; https://goo.gl/uyzvmv) It's true. It would definitely help struggling borrowers to automatically pay the lesser of the payments between a standard repayment plan and an income-based plan. And for the borrowers that want to pay down loans faster, they can instead opt-out of an income-based plan into a fixed term plan.
Better yet, can there be one repayment plan? It would be great to just have the current Income-Based Repayment Plan (IBR), which has payments capped to the standard repayment plan (10-year), with easily accessible tools to pay more each month (in recurrence or one-time) for those that want to pay less interest over time.
So the minimum a borrower must pay is 10% of income (with loan forgiveness after 20-25 years).
The maximum a borrower could be billed to pay is a 10-year fixed term amount.
The maximum a borrower could pay is the balance of the loan.
The concern may be that the borrowers who can pay, won't, but it perhaps can be mitigated by adjusting the billable cap by income-tiers (like taxes). Also don't believe in capitalizing interest for federal loans. Anyways, a lot of variables to look at and numbers to crunch, but just a thought.
Yoonki Lee founded The Project on Student Lending Transparency through kofunds. Supports more comprehensive student loan borrower protections and consumer rights in the US.