Borrowers could soon be required to pay back their federal student loans directly from their paychecks, if one powerful Republican gets his way.
Senator Lamar Alexander, a Republican from Tennessee and the chair of the Senate’s Committee on Health, Education Labor and Pensions, which oversees higher education, proposed automatically withholding a borrower’s monthly student-loan payment from their paycheck, similar to the system already used for federal payroll taxes.
Alexander floated the idea in a speech outlining his priorities for reauthorizing the Higher Education Act, the statute that governs colleges and financial aid. As a former governor of Tennessee, Secretary of Education and president of the University of Tennessee, Alexander is a prominent voice on higher education issues. He plans to retire in 2020 and has signaled that he’d like Congress to reauthorize the HEA by the end of the year.
Senator Lamar Alexander said his proposal would ‘streamline’ the nine repayment plans available to federal student-loan borrowers into ‘a new option that guarantees that borrowers would never have to pay more than 10% of their income that is not needed for necessities.’
In the speech, Alexander said his proposal would “streamline” the nine repayment plans currently available to federal student-loan borrowers into “a new option that guarantees that borrowers would never have to pay more than 10% of their income that is not needed for necessities.”
“If a borrower loses their job or does not make enough, they would not pay anything and it would not hurt their credit score,” he continued. “The monthly payment would be automatically withheld from borrowers’ paychecks, just like federal taxes.
It’s hard to say how likely it is that Alexander’s proposals will become reality. While there is bipartisan consensus on some of the challenges facing colleges and the student-loan program, experts are skeptical that the two sides could reach…