Secretary of Education Arne Duncan testified before the House Education and the Workforce Committee on Tuesday regarding the federal student loan system and the number of defaults among student borrowers.
Rep. Tom Petri (R-Wis.), a member of the committee, said he was “very concerned” with the state of the student loan system.
“Currently, almost 15 percent of borrowers will default within three years, and many more over the life of their loan,” Petri said.
Some of the defaults are due to excessive borrowing, Petri said, and other defaults could be avoided under a restructured repayment system.
Petri expressed concern with President Obama’s “Pay As You Earn” program, which enables students to pay a lower percentage of their earnings with the promise of loan forgiveness after 20 years.
“…We all share (Petri’s) concern with high levels of debt and high default rates, and we all need to work together to reduce those,” Duncan said.
Duncan assured committee members that discussion about the matter would continue.
Petri introduced the Earnings Contingent Education Loans (ExCEL) Act last year. The bill would streamline the repayment process for federal student loans and eliminate loan forgiveness programs while implementing slower interest accrual and interest caps for those with lower post-graduate earnings.