Senate proposal could snatch your student loan payment right from your paycheck
The truth is a huge percentage of this country is saddled with crippling debt. It is how our economy has come to "work".
Student debt is particularly insideous because with all the easy debt flowing to colleges the colleges have raised their prices higher and higher. In response, students have taken on more debt to pay the higher tuitions.And the cycle repeats. That's right, the reason college costs so much, and the reason costs have lurched skyward over the last 30 years, is because of the federal student loan program. (A classic, and tragic, unintended consequences situation.)
The debt is easy to take on. It's harder to pay back. And the state wants to make sure it gets its money so why not just take the student loan payments right from the paychecks of former students? That way the government is first in line and there are no misunderstandings.
Under Alexander's proposal, there would be just two repayment routes: one in which borrowers' monthly bills are capped at 10 percent of their discretionary income and another that spreads their payments out over a decade. Employers would be responsible for taking the funds from their employees' paychecks and sending them to the government. (Of course, student loan borrowers currently can set up automatic payments with their lender. They also typically get a discount on their interest rate for doing so).
"I think this proposal is likely to become law, after some tweaks," said Mark Kantrowitz, a student loan expert.