Bipartisan Costello bill would help prevent student debt defaults

U.S. Rep. Ryan Costello (R-PA) introduced legislation on Thursday that would help people on the verge of defaulting on student debt by providing information about more affordable repayment plans.

The Streamlining Income-driven, Manageable Payments on Loans for Education (SIMPLE) Act would also enable borrowers who are severely delinquent to avoid default by enrolling in income-driven repayment plans with lower monthly payments.

“Millions of Americans carry substantial student loan debt that leaves them unable to invest in their future, and our legislation will responsibly relieve some of that burden by streamlining certain loan payment options,” Costello said. 

Costello introduced the bipartisan bill with U.S. Rep. Suzanne Bonamici (D-OR).

“Under our bill, the Department of Education would auto-enroll certain borrowers who have missed payments into a lower monthly payment plan in order to reduce administrative burdens and decrease the risk of those borrowers being placed into more expensive plans,” Costello added. “I look forward to advocating for this commonsense legislation and thank Rep. Suzanne Bonamici for her leadership on this issue.”

The legislation would also use the information that student loan borrowers have on file through the IRS to automate income recertification processes and enable borrows in income-based repayment plans to continue making affordable payments.

“Many people struggle to manage student loan payments with competing expenses like housing and child care, but repayment plans based on income can help make payments affordable and safeguard borrowers’ credit,” Bonamici said. “Our bipartisan, commonsense legislation will protect a lot of people from default by making these plans easier to access and by automatically updating income information. The SIMPLE Act is one important step toward making higher education accessible and affordable for all Americans.”