Bonamici, Costello Introduce Bill to Reduce Student Loan Defaults
SIMPLE Act Connects At-Risk Student Loan Borrowers to Income-Driven Repayment Plans
This week, Congresswoman Suzanne Bonamici (D-OR) and Congressman Ryan Costello (R-PA) introduced legislation to help struggling student loan borrowers enroll in affordable repayment plans. The legislation also automates the annual process of updating borrowers’ income information while enrolled in income-driven repayment plans, which will help keep payments affordable.
More than eight million borrowers are in default on their student loans. Many of the borrowers who have defaulted would have qualified for a lower payment in an existing income-driven repayment plan. The SIMPLE (Streamlining Income-driven, Manageable Payments on Loans for Education) Act helps more borrowers participate in these plans.
“Many people struggle to manage student loan payments with competing expenses like housing and child care, but repayment plans based on income can help make payments affordable and safeguard borrowers’ credit,” said Congresswoman Suzanne Bonamici. “Our bipartisan, commonsense legislation will protect a lot of people from default by making these plans easier to access and by automatically updating income information. The SIMPLE Act is one important step toward making higher education accessible and affordable for all Americans.”
“Millions of Americans carry substantial student loan debt that leaves them unable to invest in their future, and our legislation will responsibly relieve some of that burden by streamlining certain loan payment options,” said Congressman Ryan Costello. “Under our bill, the Department of Education would auto-enroll certain borrowers who have missed payments into a lower monthly payment plan in order to reduce administrative burdens and decrease the risk of those borrowers being placed into more expensive plans. I look forward to advocating for this commonsense legislation and thank Rep. Suzanne Bonamici for her leadership on this issue.”
The SIMPLE Act allows at-risk borrowers to make more informed decisions about which repayment plans are right for them, and it automatically connects these borrowers with income-driven repayment plans before they default. Additionally, the SIMPLE Act provides for automatic recertification of borrowers’ incomes while they are enrolled in income-based repayment plans to prevent unexpected increases in loan payments.
Last year, Bonamici and Costello asked the Treasury Department and Department of Education to take steps to make it easier for student loan borrowers in income-driven repayment plans to keep their payments affordable.
You can read a summary of the SIMPLE Act here and the full text of the bill here.
The SIMPLE Act is supported by The Institute for College Access and Success (TICAS), Third Way, the National Association of Student Financial Aid Administrators (NASFAA), the American Federation of Teachers (AFT), the National Association for the Advancement of Colored People (NAACP), the National Education Association (NEA), the Pennsylvania Higher Education Assistance Agency (PHEAA), the Pennsylvania Association of Student Financial Aid Administrators (PASFAA), Young Invincibles, the Center for Responsible Lending, and the National Consumer Law Center.
