Proposal to automatically deduct loan payments as a share of borrowers’ paychecks promises big improvements but raises questions over some new complications, too.
Student advocates have for years complained about the complex set of options borrowers must navigate to repay their student loans. Student loan borrowers are faced with a dizzying nine repayment plans based on their income, in addition to a standard 10-year loan-repayment plan.
There’s a growing consensus that Congress should reduce those options to one income-based option on top of the standard plan.
Senator Lamar Alexander, the chairman of the Senate education committee, would go one step further, calling for loan payments to be automatically deducted from borrowers’ paychecks.
Alexander put forward the idea this month as part of a package he portrayed as an attainable plan for tackling the burden of student loan debt through legislation to renew the Higher Education Act. Although Alexander is motivated to pass a law thanks to his pending retirement, reaching a deal in a divided Congress is still widely seen as a serious challenge; many Democrats and advocates for students have clamored for ambitious, and expensive, federal solutions to college affordability. The framework advanced by Alexander instead focuses on making the student aid currently available work more effectively. He’s prioritized making loan repayment more manageable, simplifying the process to apply for federal financial aid and judging colleges based on students’ loan repayment.