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Congressman Pushes Income-Based Student Loan Plan


This is WEEKEND EDITION from NPR News. I'm Rachel Martin. American college students and their families are struggling more than ever to keep up with the skyrocketing cost of tuition. Young graduates are saddled with years, even decades of debt. It's an issue that lawmakers have keyed into as a way to gin up support from younger voters. Several bills have been proposed to lessen the pain of repayment. The White House recently announced several actions to help borrowers, but one of the most interesting plans out there is one that's been circulating around Capitol Hill for several decades. It was put forward first in 1983 by a Republican congressman from Wisconsin named Tom Petri. He joins me now from his office in Washington to talk more about his proposal. Congressman, thanks so much for being with us.

CONGRESSMAN TOM PETRI: Good being on the show, Rachel.

SCOTT SIMON, BYLINE: So this is an idea called income-based repayment. And I'm going to ask you to do the heavy lifting here and try to explain, in simple terms, what it is.

PETRI: Well, right now, most student loans are fixed, monthly repayment just as when you take out a mortgage. Unfortunately, when people graduate from college, their income is not necessarily even there. And so this idea of fixed, monthly payments really puts a crimp into the budgets of people when they graduate from school, if they're able to repay the loan at all. So we're proposing switching from using sort of a mortgage-based template to a fixed percentage of your income.

MARTIN: So just to clarify with an example - so if you come out of college, and you're making pretty good money, then you will pay a certain percentage. Has that been established as part of your proposal?

PETRI: In our proposal, we're proposing that 15 percent of your income - over 150 percent of the poverty level be withheld until the loan is repaid.

MARTIN: And if your situation changes, you lose your job, you have to pay anything for a while.

PETRI: No. The loan's still there, but you don't have to pay anything. And there are programs for income-contingent repayments on the books now, but they're very complicated and they're kind of bureaucracy-centered. As a result, very few people take advantage of it. Under our proposal, all you have to do when you get a job, is to tell your employer that you have a student loan. You don't even have to tell them the amount of the loan. And then they can do the withholding as part of the paycheck.

MARTIN: You started advocating for this idea of income-based loan repayment for college students - you started pushing this decades ago. Why has it been so hard to get traction on this?

PETRI: It's been slow to happen. When you have existing loan servicers, people getting interest in - I mean, someone's getting the money that people pay when they default on student loans. So they have sort of an interest in keeping the cumbersome process if there's money in it for them.

MARTIN: In the end, your proposal, though, doesn't do anything necessarily to curb the high price of a college education now. Have you given any thought to how to address that or is that just the new normal, so to speak?

PETRI: Our proposal - we're not attempting to solve every problem that exists. We're trying to make life better in one particular area.

MARTIN: Tom Petri is a Republican congressman from Wisconsin. He joined us from his office on Capitol Hill. Thanks so much for speaking with us, Congressman.

PETRI: Thank you.

SIMON: That was my colleague, Rachel Martin, who began her maternity leave early this morning. Transcript provided by NPR, Copyright NPR.

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