Higher Education Advocates Propose Student Loan Repayment Plan
"As defaults and delinquencies among federal student loan borrowers are increasing, a consortium of higher education advocacy and research organizations is calling on Congress to reform the overly complex loan repayment process. ... The consortium, which includes HCM Strategists, Institute for Higher Education Policy, National Association of Student Financial Aid Administrators, New America and Young Invincibles, proposes that all new federal student loan borrowers should be enrolled in a single repayment plan based on their income," The Association of Credit and Collection Professionals reports.
"The consortium believes it can fix the student loan repayment process and reduce the risk of unaffordable loan payments and default.
The plan, called 'auto-IBR,' would:
Automatically enroll all federal student loan borrowers in a repayment plan based on income upon leaving school.
Automatically deduct student loan payments through employer withholding.
Implement institutional accountability measures based on borrowers’ ability to repay their debt.
The auto-IBR would act as a form of insurance against tough economic times for federal student loan borrowers, particularly those who experience unexpectedly low incomes at any point during repayment. ...
'Far too many students needlessly slip into student loan default despite the numerous safeguards like income-based repayment that would keep their loans current,' said NASFAA President Justin Draeger. 'Moving to a system of auto-IBR as proposed in this paper would prevent borrowers who are already facing monumental challenges from the added dire consequences of loan default.'"
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