Should student loan payments come
directly out of your paycheck?
Students may no longer have to worry
about missing a student loan payment
if one Republican senator’s proposal to
deduct them directly from paychecks
becomes law.
Senate education committee
Chairman Lamar Alexander (R-Tenn.) on February 4
fl oated the proposal in his broad plan for updating
the Higher Education Act at an event hosted by
American Enterprise Institute. In his opening
remarks, Alexander pointed out that the United
States has more graduates paying off college debt
than any other country in the world, with 40 million
borrowers amassing $1.5 trillion in student debt.
Alexander’s plan would replace the “rigid
archaic payment system” that currently exists with
two options that both deduct payments directly
from a borrower’s paycheck. The fi rst option
would simply be a fi xed 10-year repayment plan
schedule, which could help those who are able to
aff ord it pay off their loans faster.
But the option that Alexander believes will be
the most popular is an income-based repayment
plan in which the borrower never has to pay more
than 10 percent of their income that is not needed
for necessities.
For someone with a starting salary of $43,000,
for example, with yearly necessities estimated
to cost $18,735, they would pay 10 percent of
the remaining $24,265 per year, which is $2,427
or $202 per month. For someone with higher
necessity costs such as a single parent, their
payments would be lowered to refl ect that.
“And if a borrower loses their job or does not
make enough, they would not pay anything and it
would not hurt their credit score,” Alexander said.
Alexander also proposed a way to simplify the
Free Application for Federal Student Aid (FAFSA),
as well as an accountability system that measures
whether students are actually paying off their loans.
To simplify FAFSA, Alexander is reintroducing
legislation that would shorten the application
from 108 questions to no more than 25 basic
questions about a student, their family and
their plans for college. He is also reintroducing
legislation that would allow families to answer
up to 22 questions with just one click, eliminating
the need to give the Department of Education the
same information that has already been given to
the IRS.
According to Alexander, the complexity of the
current FAFSA application discourages some
families from applying, and an estimated $6
billion in mistakes are made by the Treasury
Department each year by awarding too much or
too little aid.
Lastly, the proposed accountability system
will apply to all public, private and for-profi t
schools and essentially threaten to cut federal
aid to schools whose graduates are consistently
struggling to repay their loans. This would
hopefully encourage some schools to lower tuition
and create more programs that help students fi nd
jobs after graduation.
“It is our responsibility to take whatever steps
we can to help students aff ord college and make
sure that the degrees they earn are worth the time
and money they pay for them,” said Alexander.
BY RYAN KELLEY
Courtesy of Senator Lamar Alexander
Image via Pexels
QNS.COM
16 SPRING 2019
/QNS.COM