New Student Loan Bill Would Help Borrowers Access More Affordable Payments
The SIMPLE Act comes as student loan delinquencies remain elevated after pandemic-era relief measures ended.
A new bill in Congress would automatically place struggling federal student loan borrowers into more affordable repayment plans to prevent defaults, according to the Streamlining Income-Driven, Manageable Payments on Loans for Education (SIMPLE) Act introduced by Oregon Democratic Representative Suzanne Bonamici. The legislation aims to simplify the enrollment process for income-driven repayment plans, which currently confuse many borrowers, especially post-pandemic relief measures.
Defaulting on a federal student loan can lead to serious consequences such as wage garnishment, damage to credit scores, and loss of federal benefits. As of March, about 13 percent of student loan borrowers had defaulted, representing roughly 9 million borrowers with $220 billion in outstanding debt. The SIMPLE Act would notify borrowers after 31 days of delinquency and automatically enroll them in the most favorable income-driven repayment plan after 75 days, using existing IRS income data.
This intervention could help prevent defaults and collection actions without forgiving the debt. The bill's supporters argue it would benefit low-income borrowers and those with smaller balances who are at risk of default. However, the legislation faces challenges in passing due to the current political climate, with some experts expressing doubts about its swift approval.
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