Student loan borrowers fear a repayment overhaul proposal could tighten purse strings
Millions of Americans are trying to keep their heads above water as they struggle with student loan debt. A Tennessee senator is proposing what he calls an easier system for repaying these loans. But some former students do not think it will help.
“We definitely make some sacrifices,” said Katherine Tenner, a University of District of Columbia Masters degree program graduate.
Tenner says she lives from paycheck to paycheck in Washington. She says she is struggling to pay back $60,000 in student loans. She says the debt affects everything she does. Tenner is now a speech pathologist.
“It’s definitely helping to have a steady income but you know it is definitely still difficult,” said Tenner.
Tenner is able to get by in D.C., but she says proposed changes to the student loan repayment system by Senator Lamar Alexander (R-TN) could make life more difficult.
“We take it out of the paycheck every month, then the taxpayer knows they’re getting paid back, and the student’s not having nightmares,” said Alexander.
Alexander wants 10 percent taken out from monthly paychecks of those owing student loans and says those loans will be forgiven after 20 years if they are not yet paid off. He says borrowers determine how much they need to take out for living expenses, and then the rest of the paycheck is susceptible to the 10 percent takeaway. If student loan borrowers do not receive a paycheck, money is not taken. Alexander says this is part of a push to simplify the system, making sure borrowers do not default and lenders get paid.
“The student loan business is so complicated. There are nine different ways to pay off your student loan,” said Alexander.
Ben Miller from the progressive Center for American Progress says borrowers like Katherine cannot afford to have 10 percent taken out monthly. He says oversimplification of the system looks past the fact that every student is in a different situation and has different needs.
“In an expensive metro area, even taking 10 percent of your discretionary income is probably going to be unaffordable,” said Miller.
Alexander says he hopes to come to an agreement on his proposal in the Senate sometime this spring.
The White House is also joining the student loan conversation. The administration announced it is looking to cap the amount of federal student loans that parents and graduate students can borrow. They also suggested a possible paycheck withdrawal of 12.5 percent of a borrower’s discretionary income, with loan forgiveness after 15 years.