If passed, Congressman Ferguson's "Help Students Repay Act" would impact student loan repayment plans.
Congressman Drew Ferguson has come up with the so-called ''Help Students Repay Act'' which would feature significant changes to the student loan repayment system.
If passed, it would apply to new loans, but it wouldn’t impact old student loans. In Ferguson's view, the new bill would simplify the current complicated loan repayment legislation.
House Resolution 4372 would limit the current wide variety of student loan repayment plans and programs. It would only allow two options: the standard, 10-year repayment and just one income-based repayment plan.
Until now, student loan borrowers could choose among five income-driven options to repay their debts over 20-25 years. After that period, any remaining amounts are forgiven. Additionally, there were several repayment plans outside of the standard, 10-year plan such as graduated repayment.
When commenting on loan forgiveness, Ferguson said it did not motivate the students to pay down their student debt since they hoped the outstanding balance would be forgiven at some point in the future. That is why he suggested the borrowers to be accountable for the repayment of the whole amount due; however, but interest would stop amassing after ten years.
The new bill suggested that the income-based plan would have payments set at 15 percent of the discretionary income. Currently, income-driven repayment plans cap payments at 15 percent of the discretionary income, while others put the cap at 10 percent.
Senator Ferguson has been working on the new bill for the past couple of months. When he started the initiative, his team prepared a survey to send to all the subscribers on the congressman's newsletters. According to his colleagues, more than 3,000 people responded and made suggestions.
Image Copyright © Susan Ruggles