[Congressional Record Volume 152, Number 114 (Thursday, September 14, 2006)]
[Extensions of Remarks]
[Page E1728]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE INCOME-DEPENDENT EDUCATION ASSISTANCE ACT OF 2006

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                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                      Thursday, September 14, 2006

  Mr. PETRI. Mr. Speaker, today, I am introducing the Income-Dependent 
Education Assistance (IDEA) Act of 2006. This legislation would provide 
a new consolidation option for federal Stafford student loan borrowers 
with an improved repayment schedule through direct IRS collection of 
payments, along with other new protections for borrowers and taxpayers.
  I believe that the IDEA Act will address the oft-overlooked side of 
federal student loan assistance: repayment. For over four decades, most 
of the discussion regarding federal student loans has primarily focused 
on making ever-increasing amounts of money available to students to 
keep up with the rising costs of college tuition. Of course, that is 
critically important, and I was pleased to support the Deficit 
Reduction Act earlier this year which raised loan limits and increased 
loan options for graduate students.
  However, providing students with larger loans to attend college leads 
to another, more complex challenge after graduation. How should 
students be expected to repay these taxpayerfunded loans? This is an 
area that has received relatively little attention until recently. With 
students graduating with ever-increasing debt loads, averaging over 
$18,000 this year and projected to continue to rise, students are 
finding it increasingly difficult to make loan payments on time and in 
full.
  Unfortunately, little has been done by way of providing more flexible 
repayment options for borrowers after graduation. Traditionally it has 
been expected that the borrower will pay the amortized loan over a 
standard period, usually 10 years, with the same repayment amount on 
day one as on the last day. However, this model of repayment fails to 
take into account that students often face periods of significant 
unemployment or underemployment during the first years after leaving 
college.
  As of now, for the most part, the only options available to borrowers 
are to request a period of forbearance or slip into default, which is 
bad for both borrower and taxpayers. We simply cannot keep providing 
more and more money for education if graduates then enter the workforce 
saddled with payments they can't afford.
  While there have been some attempts to provide more diverse repayment 
options, such as the ICLR repayment program that has been in existence 
for over a decade, borrowers have failed to adopt them, usually due to 
a lack of information or current program limitations. The bottom line 
is that Congress needs to develop better repayment alternatives for 
federal student loan borrowers, especially as students continue to take 
out larger and larger loans in coming years. I believe the IDEA Act 
does just that.
  This legislation would allow any Stafford loan borrower the ability 
to consolidate into a direct IDEA loan with a repayment schedule that 
corresponds to the borrower's income once in repayment. This new 
schedule requires regular payments; however, it ensures that such 
payments reflect the borrowers' capacity to repay under their current 
income status. This feature would be particularly useful for those 
pursuing lower-income, public-service careers. It also would help 
relieve some of the stress that borrowers face during periods of 
unemployment or underemployment following graduation.
  Another critical component of this legislation is the direct 
collection of payments from the borrower through IRS withholdings. By 
incorporating the IRS directly as the collection entity, the borrower's 
income is automatically calculated into the repayment system and 
reduces the odds of fraud or abuse on the part of the borrower or the 
collection agency. Furthermore, direct IRS collection would simplify 
the process for borrowers and reduce their paperwork burden as the 
agency would already have the necessary information on file and in 
place for processing the payment amounts and schedules. Finally, the 
IDEA Act stipulates that borrowers that go into default and have 
exhausted all relief from the loan holder would automatically be 
consolidated into IDEA loans in order to help them get their payments 
back on track and avoid costly defaults. Thus the taxpayers' investment 
will be protected from the damaging effects of borrower default, which 
currently affects 4.5 percent of federal student loans each year.
  Mr. Speaker, the IDEA Act of 2006 is an innovative solution to the 
growing problem of unmanageable debt loads for students. Students would 
be able to borrow what they need, up to the current Stafford limits, 
and later consolidate into IDEA loans knowing that their repayment 
amounts will be within their income levels and ability to pay. On the 
other hand, taxpayers can count on those loans being repaid as they are 
collected through the IRS. This is a responsible approach to a serious 
and growing problem for student loan borrowers.

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