Report highlights need for student loan repayment reform

A report released on Thursday by a consortium of higher education advocacy and research organizations highlighted the importance of simplifying income-based repayment for federal student loans and other related reforms.

The report, which was commissioned by the Bill and Melinda Gates Foundation as part of the Reimagining Aid Design and Delivery project, suggested that students should automatically be enrolled in IBR, and the employer withholding system should be used to streamline the repayment process.

House Education and Workforce Committee Member Rep. Tom Petri (R-Wis.) and Rep. Jared Polis (D-Colo.) previously cosponsored legislation that would take those steps.

“I’ve long believed the current federal student loan repayment system is far too complicated and confusing for borrowers,” Petri said. “This report confirms what I’ve been hearing and what has been said at education committee hearings for some time – namely that we need to simplify the process so that fewer students default on their loans. Automatically enrolling students in income-based repayment is the best way to do that.”

Under the Earnings Contingent Education Loans Act, broad-based forgiveness programs would be eliminated and interest on federal student loans would accrue rather than compound. Interest would also be capped to help borrowers who are struggling.