Congressman Lee Zeldin announced that he’s working on making changes to the way people pay back their student loan debt after graduation to curb a growing student loan crisis facing the nation.
Called the Earnings Contingent Education Loans (ExCEL) Act of 2015, the legislation would allow graduates to pay back their student loans at a rate determined by their annual income. And while income-based payment plans are already in effect, the way in which the loans are administered should help reduce the number of defaults, the congressman said.
The way it works is that people pay an income-based amount each month, which is withheld from their paychecks — that’s in contrast to the current system, which pays former students, who then pay back the government.
Should their annual income increase, the amount they owe would increase accordingly, Mr. Zeldin (R-Shirley) said. Additionally, should someone encounter financial struggles, their payments would decrease and interest would be suspended, he said. This differs from the current student loan payment set up, which Mr. Zeldin said is a more rigid payment plan.
“[Under] the current law, whether you are unemployed looking for a job or out making $300,000, [the government] treats everyone the same,” he continued.
“It’s a simpler approach — it eliminates a lot of confusing paperwork,” said a spokesperson for the congressman, Jennifer DiSiena. “And it’s a more individualized approach.”
With this plan, the amount of time it takes to fully repay loans could be different for everyone. For example, “for some people, it might require 17 years to pay off your student loans. For others they might be able to pay it off in 7 years,” said Mr. Zeldin.
“To advance in life, one of the best paths to do so is with higher education,” Mr. Zeldin said at Monday’s press conference at the Long Island University Riverhead campus. “However, the skyrocketing costs of higher education force many Americans to borrow exorbitant sums of money to accomplish this goal. A student debt crisis in our country has now emerged.”
According to the Department of Education, nearly 12 percent of borrowers have defaulted on loan repayments from 2013 to 2015. Additionally, the U.S. government is faced with almost $800 billion in outstanding student loans. According to the Congressional Budget Office, the government is expected to lose nearly $20 billion over the next 10 years.
“The taxpayers —the rest of us — are on the hook for all of that money,” Mr. Zeldin said.
Mr. Zeldin said that graduates only have to file their debt once on their initial tax paperwork through their employer. After that, changes to their loan payments will be made accordingly.
While he said this legislation would benefit students trying to pay back loans, it will benefit the American government and the taxpayer “by dramatically reducing the default rates.”
The legislation is currently at the House Education and Workforce Committee, and Mr. Zeldin is educating colleagues and looking for more cosponsors.
“This is an important issue,” said County Legislator Al Krupski at Monday’s press conference. “I know people have said it, but the youth are our future and if we don’t pay attention to what they’re doing, it’s going to hurt us in the long run.”
Photo Caption: Congressman Lee Zeldin — joined byGreg Blower from Senator Kenneth LaValle’s office, County Legislator Al Krupski and SUNY Plattsburgh student Adam Siccardi — speaks at Long Island University’s Riverhead campus on Monday. (Credit: Nicole Smith)