Costello paves way for easier access to affordable loans for student borrowers

U.S. Rep. Ryan Costello (R-PA) led a bipartisan congressional call on Wednesday urging the Department of Treasury and Department of Education to pursue a plan to make affordable loans more accessible to students.

The departments announced in January that they would work toward automatically certifying the income of borrowers enrolled in income-based repayment plans. Currently, borrowers are responsible for re-certifying their incomes each year, and failing to do so on time can lead to rate increases.

U.S. Reps. Patrick Meehan (R-PA), Carlos Curbelo (R-FL) and Elise Stefanik (R-NY) were among the bipartisan group of lawmakers that signed a letter to the departments.

“The departments’ memorandum of understanding (MOU) outlining a multi-year consent system that uses tax data to automatically recertify student loan borrowers’ income information will help millions of borrowers access affordable payments and avoid delinquencies and defaults,” the letter states.

“Failure to meet annual recertification deadlines can increase the risk of default and lead to long-term financial hardship for borrowers. Today, more than 8 million borrowers are in default. Many more are behind on their payments. These people — roughly one quarter of student loan borrowers — face serious long-term consequences,” the letter said.

The Social Security benefits and tax refunds of borrowers in default can be held, the lawmakers added, and their wages can be garnished.

Credit reporting agencies register defaults, which could hurt borrowers’ access to financing in the future when they want to purchase a car, a business, or a home. “With a multi-year consent system in place, more borrowers will be able to avoid these negative outcomes,” the letter added.

Costello and U.S. Rep. Suzanne Bonamici (D-OR), a coauthor of the letter, last year introduced the SIMPLE Act, or the Streamlining Income-driven, Manageable Payments on Loans for Education Act to automatically connect at-risk borrowers with income-driven repayment plans before they default.