Bonamici Introduces Legislation to Lower Risk of Student Loan Borrower Default

WASHINGTON, DC [7/31/24] - This week Congresswoman Suzanne Bonamici (D-OR) introduced legislation to help prevent borrowers from defaulting on their student loans.

The Streamlining Income-driven, Manageable Payments on Loans for Education (SIMPLE) Act would automatically enroll struggling borrowers in income-driven repayment (IDR) plans to make repayment more affordable. IDR has been proven to help student loan borrowers avoid default and delinquency because it provides plans that better match their financial ability, but current administrative hurdles can discourage borrowers from enrolling. The SIMPLE Act streamlines the process by removing unnecessary paperwork requirements and using existing taxpayer information at the Department of Education and U.S. Treasury to automatically connect borrowers with protections.

"Education is a good investment, but too many borrowers experience long-term financial hardship because of an overly complicated student loan system that limits access to the best repayment plan available to them," saidCongresswoman Suzanne Bonamici. "We've made significant progress toward fixing our broken student loan system during the Biden-Harris administration, but we must do more to support struggling borrowers. The SIMPLE Act helps borrowers access affordable repayment plans that reduce their risk of experiencing the devastating consequences of default."

Student loan default can lead to wage garnishment and the withholding of tax refunds and Social Security benefits. It also can harm credit ratings, making it difficult for borrowers to purchase a car or a home. These consequences disproportionately affect low-income borrowers and borrowers with up to $10,000 in debt and no degree, who are most vulnerable to default.

"Problems arise for many student loan borrowers not due to an inability or unwillingness to pay, but rather due to needless complexity within the system. Many are simply unaware of generous income-driven repayment plans that can lower their monthly payments. The SIMPLE Act would expand access to affordable income-driven repayment options by automatically enrolling struggling borrowers in those plans before they experience the punitive consequences of default. The financial aid community stands in support of this bill," saidKaren McCarthy, Vice President of Public Policy & Federal Relations, National Association of Student Financial Aid Administrators (NASFAA).

"We applaud Rep. Bonamici for leading the SIMPLE Act, which makes common-sense improvements to help student loan borrowers access more affordable repayment options and avoid the devastating consequences of loan default," said Michele Zampini, Senior Director of College Affordability, The Institute for College Access & Success (TICAS).

You can read the full text of the SIMPLE Act here.

The legislation is co-sponsored by Representatives Seth Moulton, Jahana Hayes, Mark Takano, Lucy McBath, and Frederica Wilson.

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