Then there are several practical steps to take if universal and automatic REPAYE is the goal

Eliminate loan “rehabilitation”, the long and onerous procedure that defaulted borrowers must presently undertake prior to engaging in REPAYE. Just place them in REPAYE straight away.

Let the IRS to offer earnings information straight to your Department of Education for purposes of implementing REPAYE. Or, even better, allow for loan payment through the withholding system utilized to collect payroll and taxes, amending Form W-4 to inquire of about figuratively speaking, and permitting self-employed people to upgrade re re payments according to their quarterly profits. It’s not really a panacea, however it will make life easier and easier for borrowers.

Clean the credit reporting up of defaulted or delinquent borrowers signed up for REPAYE. Particularly if loan payments may be made through payroll withholding, borrowers really should not be involuntarily defaulting or delinquent as a result of unemployment or hardship. Eliminating the training of reporting these durations as defaults or delinquency would eliminate a vital barrier borrowers face once they look for use of credit later on.

Then, end the Treasury Offset Program—the program that confiscates defaulted borrowers’ tax refunds—and stop wage and Social protection garnishment for education loan borrowers signed up for REPAYE. The current program effectively cancels the largest social insurance program for working, low-income families, plunging them into deep poverty because the Treasury offsets refunds of the Earned Income Tax Credit or Child Tax Credit.

Congress must also eradicate the tax that pertains to discharged financial obligation under present legislation, because they did for PSLF and for loans released for the disability or death associated with debtor. (more…)

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