Since the federal government is in the student loan business by federally guaranteeing student loans, they are looking for crafty ways of getting their money back.
One bill suggests taking student loan payments automatically out of a paycheck as a payroll deduction.
We all want students to pay their loans back but I feel this would make it less of an incentive for students to want to work and gain marketable skills that will serve them well their entire lives.
Student Loan debt in the U.S. recently crossed the $1 trillion mark, with a good chunk of that owed to the U.S. government. In an attempt to streamline the whole process, a soon-to-be-introduced bill would replace the current system of debt collection with automatic payroll deductions tied to the borrower’s income.
Similar systems are already in place in the U.K., Australia, and New Zealand, and Wisconsin Representative Tom Petri plans to introduce the idea to Congress as soon as this week, reports Bloomberg.
Rather than paying huge fees to third-party bill collectors, the government would debit borrowers’ paychecks at an amount capped at 15% of income after basic living expenses.