WASHINGTON — A U.S. senator is proposing for student loan payments to come directly out of a borrower’s paycheck.
According to Forbes, U.S. Senator Lamar Alexander, R-TN, advocated for automatic payroll deductions when it comes to student loan repayment in a new proposal.
Working similar to taxes and Social Security, federal student loan payments would be deducted from your paycheck before it even reaches your hand.
Alexander’s proposal could bring a few advantages, including preventing borrowers from defaulting on their payments and ensuring the loans get paid off over all. However, automatic loan payments may increase financial pressure on borrowers, especially low income borrowers.
Forbes reports that Alexander proposed consolidating the nine current student loan repayment plans into two: a standard 10-year repayment plan and a Revised Pay As You Earn (REPAYE) plan.
Under the REPAYE plan, loan payments would have a cap of 10 percent of discretionary income and borrowers could receive student loan forgiveness after 20 years for undergraduate student loan debt or 25 years for graduate school student loan debt.
It is unclear what would happen for freelance workers who have fluctuating income or what would happen if borrowers lose their jobs.
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