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Bipartisan Legislation Tackles Student Loan Defaults

August 4, 2017
 
 

A bipartisan group of House and Senate lawmakers introduced legislation Thursday to address student loan defaults by steering delinquent and defaulted borrowers toward income-driven repayment programs and reducing other paperwork barriers to student loan relief.

The SIMPLE Act -- Streamlining Income-driven, Manageable Payments on Loans for Education -- is co-sponsored by Representative Suzanne Bonamici, an Oregon Democrat, Representative Seth Moulton, a Massachusetts Democrat, and Pennsylvania Representatives Ryan Costello and Patrick Meehan, both Republicans. Senator Ron Wyden, an Oregon Democrat, introduced the legislation in the Senate. The bill would require the Department of Education to use federal data on borrowers' income to automatically enroll them in income-driven repayment programs and to verify annual recertification of those borrowers.

If badly delinquent borrowers do not act on personalized outreach about income-driven repayment plans, the legislation would have the department automatically enroll them in those plans. And it would have the department use defaulted borrowers' income information to automatically enroll them in income-driven repayment after rehabilitating their student loan debt. The bill would also allow permanently disabled borrowers to have their eligibility for loan discharge automatically verified.

The Department of Education and U.S. Treasury had already agreed to automate borrowers' annual recertification for income-driven repayment plans. The legislation, however, requires that change within two years. That change has received past support from student advocates, higher ed institutions and student loan servicers.

"At a time when one in four federal student loan borrowers are delinquent or in default on their student loans, the bipartisan SIMPLE Act makes common-sense and urgently needed improvements to make it easier for borrowers to enroll and continue making affordable payments in income-driven repayment," said Jessica Thompson, policy and research director at the Institute for College Access and Success.

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