How would you like it if your student loan payments came directly out of your paychecks? Does it sound scary? Does it sound convenient? A little of both? Probably. It’s called Income-Based Student Loan Payment.
Well, that’s what’s being proposed by Wisconsin Republican Representative Tom Petri in a new bill I first read about in the Consumerist. The bill would force employers to withhold payments from wages in the same way they do taxes. However, the amount they could take is capped at 15% AFTER basic living expenses. Now how the basic living expenses are determined just isn’t clear. What is clear is that this would save the government lots of money by not dealing with 3rd party collection agencies. By capping the amount due, debtors are much less likely to fall behind and risk default and credit catastrophe. On the face of it, it appears like it could be good for everyone (except collection agencies so it must be a great time to be a collection agency lobbyist!).
What do you think about Income-Based Student Loan Payment?