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. ….
…. While the proposal to reduce the myriad repayment options for borrowers already has broad support among higher ed interest groups, getting buy-in for making student loan payments work more like payroll taxes is more uncertain.
Jessica Thompson, director of policy and planning at the Institute for College Access and Success, said streamlining the repayment plans available to borrowers is “an overdue change.” But she said paycheck withholding for loan payments is “in reality a lot more complicated than it sounds.” ….