Proposal would snatch student loan payment from your paycheck
A U.S. senator is proposing a plan that would have college graduates pay back student loans from their paychecks.
Senator Lamar Alexander, R-Tennessee, suggests loan payments should be automatically taken out of income, like taxes are.
Average debt at graduation is currently around $30,000, up from $10,000 in the early 1990s. The country's outstanding student loan balance is projected to swell to $2 trillion by 2022.
Alexander says the borrower would not pay more than 10% of their discretionary income.
If they lose their job or do not make enough money, they would not pay anything and it would not affect their credit score.
According to the Tennessee Republican, if the borrower does not like that plan, they can opt for the existing 10-year loan repayment plan schedule.
He believes it will help loans get paid off quicker.
Alexander is proposing his student loan repayment plans as part of reauthorizing the Higher Education Act.
Consumer advocates are criticizing the plan, calling it "mandatory wage garnishment."
The changes could affect some 40 million people.