[Congressional Record Volume 153, Number 85 (Wednesday, May 23, 2007)]
[Extensions of Remarks]
[Page E1136]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF THE INCOME-DEPENDENT EDUCATION ASSISTANCE ACT OF 2007

                                 ______
                                 

                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                        Wednesday, May 23, 2007

  Mr. PETRI. Madam Speaker, today, I am introducing of the Income-
Dependent Education Assistance (IDEA) Act of 2007. 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.
  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 income-contingent loan repayment program available 
through Direct Lending 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 5.1 percent of federal student loans each year.
  Madam Speaker, the IDEA Act 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.

                          ____________________