According to CNBC, if a new GOP proposal becomes law, student loan borrowers would have their monthly bills deducted from their paychecks automatically. Senator Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor and Pensions Committee, explained the plan earlier in the month. The new legislation could affect around 40 million people.
In the early 1990s, the average debt at graduation was $10,000. Now it is $30,000. By 2022, the country’s outstanding loan balance is expected to reach $2 trillion.
With the new GOP proposal, there would be two ways to repay the bills. In the first way, "borrowers’ monthly bills are capped at 10 percent of their discretionary income." In the second way, payments would be spread out over a decade. Employers would be the ones responsible for taking the correct funds from their employees’ paychecks to send to the government.
"I think this proposal is likely to become law, after some tweaks," said Mark Kantrowitz, a student loan expert.
Alexander indicated that the proposal would both protect borrowers and streamline the system. “It makes sure if there were no money earned, there would be no money owed and that would not reflect negatively on a borrower’s credit.”
Consumer advocates criticized the plan, calling it “mandatory wage garnishment.”
"For borrowers with tight budgets that need to be navigated on a monthly basis, forced automatic payroll withholding may mean diverting money away from rent, heat or food in order to pay their student loans," reads a report by the National Consumer Law Center.
Critics argue that payments should be voluntary and some people need flexibility in order to pay their student loans.
Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities, called the proposal a "detour from real reform."