Pending Bill to Take Money Out of Paychecks to Lower Student Debt

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Pending Bill to Take Money Out of Paychecks to Lower Student Debt

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Tennessee Sen. and Republican chairman of the Senate Health, Education, Labor and Pensions Committee, Lamar Alexander, has come up with a strict payment plan that corresponds with the country’s massive student loan pileup that is projected to go reach as $2 trillion by 2022.

There is reportedly an average of $30,000 of average student debt by the time student’s graduate school, which is $10,000 higher than it was in the 1990s. As of right now, there are currently 14 different ways of repaying back their borrowed money.

However, Alexander proposed a new law, where there would only be two methods that students are able to pay off their student loans. One where students have to pay 10 percent off of their monthly discretionary income. The second method is where their payments are stretched out over a 10-year period. Employers would be held responsible for taking out money off their worker’s checks and giving it to the government. Student loan expert, Mark Kantrowitz, said “I think this proposal is likely to become a law, that is, after some tweaks.”
Alexander continued saying that this new proposal who decrease the student debt and improve the efficiency of protection for borrowers. He stated that,
“It makes sure if there was no money earned, there would be no money owed and that would not reflect negatively on a borrower’s credit.”
However, this method drew some backlash from consumer supporters who called it “a mandatory wage garnishment”.

National Consumer Law Center declared that “For people with tight budgets that need to navigate a monthly income, forced automatic payroll withholding may mean diverting money away from rent, heat or food…”

When asked about the new proposal being pushed to be a new law, Bucks student, Dimitrios Manesis, a 20-year-old Radiation Technology major, expressed his opinion and commented that, “It’s a pretty great idea because it would make our student loans manageable and quick to pay off.”

“If I lived in Tennessee, this option would be suitable since the rent down there is cheaper, so paying it off would be easier. On the contrary though, living in Bucks County, rent is expensive and it would take a long time for my student loans to be paid off,” Manesis said.

Kantrowitz explained that when students default on their federal loans, the government have the power to garnish up to 15 percent of the student’s wages. Kantrowitz then uses this to support Alexander’s 10 percent garnishment, thus making the new proposal more likeable.

20-year-old Animal Science major from Delaware Valley University, Kathrine Weiser, has mixed feelings about the wage garnishment plan.

“I’m always worried about money, but at the same time I’m worried about my student loans piling up. Each paycheck, I earn about $100 after taxes are taken out and while taking five classes, already stressing me out. If the government were to take 10 percent of that, I would have to critically analyze what I need to spend on to survive. It’s worrying, but at the same time, I can easily pay off my student loans. It has its pros and cons,” Weiser explained.

Director of Federal Relations of the American Association of State Colleges and Universities, Barmark Nassirian called this proposal a “detour from real reform”.
“This is a system rife with fraud and predatory lending”, adding that students might have a problem of privacy when it comes to their employers knowing their financial debt.

While this bill is trying to be passed still, it would be for the best to do more research into it and find out more about the pros and cons this bill will bring.

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