Helping borrowers navigate the complicated student loan system is an area ripe for more bipartisan initiatives.
Student loan servicing is not without problems, but it is unclear whether the Education Department’s new approach will actually improve the system.
Changes to the federal student loan program can increase competition, transparency and innovation in higher education.
The costs of college tuition and room-and-board are skyrocketing, putting additional pressure on federal support and requiring many students to assume even greater debt burdens.
As tuition climbs and student debt balloons, ISAs have the potential to lower risks facing borrowers by offering fixed payments and avoiding heavy debt burdens.
A lack of oversight has led to a serious accountability gap, with institutions remaining largely “off-the-hook” for poor student outcomes.
One-third of those with federal student loans in repayment are more than 90 days delinquent, and trends point to delayed homeownership and retirement savings.
The program, previously in existence but drastically underutilized, directly transfers 10 percent of the borrowers’ annual incomes from their monthly paychecks towards repayment of their debt, with an annual $10,000 income exemption clause.
““The Bipartisan Policy Center (BPC) applauds the Senate and the House of Representatives for their bipartisan passage of legislation to reform direct federal student loan rates. This bill prevents rates on new subsidized Stafford loans from doubling to 6.8%—an increase that would have impacted millions of students nationwide.”