Bonamici and Costello Seek to Improve Student Loan Repayment
This week, Congresswoman Suzanne Bonamici and Congressman Ryan Costello called on the U.S. Department of Education and the U.S. Department of the Treasury to make it easier for student loan borrowers to keep their payments affordable.
In a bipartisan letter signed by 30 of their colleagues, the lawmakers ask the departments to create a multi-year consent option for borrowers in income-driven repayment plans. This option would simplify the process for student loan borrowers who want to continue making payments based on their income.
“Too many student loan borrowers are struggling to make ends meet,” Congresswoman Bonamici said. “These borrowers should at least have a simple option that keeps their monthly loan payments manageable. I am pleased to be working with Congressman Costello on commonsense policy that will help alleviate some of the burden of student loan debt.”
“By offering borrowers a multi-year consent option we are improving the status quo for millions of students across the nation,” Congressman Ryan Costello said. “It’s a basic step that we can take to simplify the process for borrowers seeking make affordable payments based on their income.”
Currently, borrowers in income-driven repayment plans must submit annual income information. Recent data from the U.S. Department of Education revealed that more than half of borrowers in some income-driven repayment plans missed the deadline to submit the information needed to calculate their monthly payments. When borrowers do not certify their income on time, their monthly loan payments can increase, sometimes by hundreds or thousands of dollars.
Sudden increases in payments can trigger a series of negative consequences for borrowers, many of whom are already struggling to pay down their student loan debt, and can contribute to delinquency, default, and damaged credit. A multi-year consent option would allow borrowers to have their income information used automatically each year to calculate affordable payments.
“With over half of borrowers in income-driven repayment plans missing annual deadlines to update their income information, the process clearly needs fixing,” Lauren Asher, president of the Institute for College Access and Success, said. “Borrowers should be able to give the Department of Education advance permission to automatically access the required tax data when the borrowers’ updated income information is due each year. This multi-year consent used to be an option for federal student loan borrowers, and it should be again. It will help struggling borrowers keep their payments manageable and avoid delinquency and default, and reduce the paperwork burden for both borrowers and loan servicers.”
"Allowing borrowers to authorize the Department of Education to use tax data to annually update their incomes so can they stay in income-based repayment plans over multiple years is a crucial step in maintaining support for struggling borrowers,” Jennifer Wang, policy director at Young Invincibles, said. “Failure to recertify income annually can result in staggering spikes in monthly payments that many borrowers simply cannot pay. Multi-year consent will streamline and simplify a confusing process and could benefit millions of people trying to repay their student debt."
