"Senator King and I are introducing this discussion draft instead of legislation so we can receive feedback from the public - student borrowers, our Congressional colleagues, experts in the field, or anyone else who can bring to the table thoughtful discussion on how to best help our students," said Senator Burr. "I understand how daunting it can be to finish school and face the uncertainty of unemployment, on top of the anxiety of how to repay student loans. It is my hope that we will receive robust feedback in the coming months to better this draft and inform
"Student borrowers already have more than enough to worry about after they graduate without having to wrap their heads around the confusing maze of federal loan repayment options," Senator King said. "That's why Senator Burr and I are offering this discussion draft as a concrete first step towards simplifying these programs. Students ought to be able to easily navigate their options, make a choice that best serves their needs, and keep money in their pockets. I look forward to hearing feedback from students, parents, my colleagues, and experts across the country as we look at ways to improve college affordability in America."
Section 1 -
Section 2 - Creates a new Simplified Income-Driven Repayment plan that--
Streamlines loan term and forgiveness schedule:
o For borrowers with loan balances of up to
o For borrowers with loan balances over
Creates a simple monthly calculation rate that ensures borrowers never pay more than 15% of their monthly discretionary income through the life of repayment; and
Calculates loan payments for households based upon household income.
Section 3 - Provides for a new set of simplified repayment options, as created by the King/Burr draft, that take effect
Section 4 - Tax Provisions
* Under section 464 of the Higher Education Act, individuals exhibiting total and permanent disabilities, defined as likely leading to death and/or complete unemployment, are eligible for student loan forgiveness. With that, however, comes the expectation of tax liability for the amount forgiven, leading to large tax bills for these disadvantaged individuals. The King/Burr draft would provide complete tax forgiveness for individuals exercising the Total Permanent Disability (TPD) discharge of their student loans.
Section 5 - Instructs the Secretary of Education to direct federal student loan servicers to notify borrowers about the repayment plans available to them, outline the financial impact of switching to alternative repayment plans, and offer to enroll individuals in such plans, if eligible.
To read more about the King/Burr Loan Repayment Reform discussion draft, go to: http://www.burr.senate.gov/public/_files/King-BurrDiscussionDraftOnePager.pdf and to see the full legislative text, go to: http://www.burr.senate.gov/public/_files/AEG14338.pdf.
Read this original document at: http://www.burr.senate.gov/public/index.cfm?FuseAction=PressOffice.PressReleases&ContentRecord_id=e57751c8-e366-90a9-3fe8-1c0c1a0d97ba&Region_id=&Issue_id=
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