Petri Promotes Student Loan Plan at Marian College
FOND DU LAC - Marian College held a "town hall" meeting Tuesday to discuss student financial aid with Rep. Tom Petri (event photo). The 6th District congressman explained his efforts to encourage participation in direct loans made by the federal government to students as opposed to subsidized guaranteed loans, which are made by private lending institutions. Petri also advocated tying the rate of loan repayment to the borrower's income after college.
"The Direct Loan program is about a third of the loans, and is billions of dollars a year cheaper to the federal taxpayer than the Guaranteed program. So, I've been working to give more schools incentives to participate in the Direct program, and to improve it even further," Petri told meeting participants.
"The major improvement in that area, something that I think is going to come because other countries have started doing it already, is to give students, after they graduate, the option of consolidating all their loans, and then having them collected by our friends, the Internal Revenue Service, by withholding from each paycheck," he continued.
"The advantages of that are that you can cap the amount that you would owe at no more than 15 percent of each paycheck. If you aren't earning money, you wouldn't be in default if you didn't pay anything. The loan can be automatically rescheduled. You wouldn't be forgiven that payment, but it could be added back into the balance that you owe, so you would have to pay back over a longer period," he said.
"From a borrower's point of view, it's obviously fairly convenient. It also means you don't run into the problem of default and a bad credit rating as a young person. An awful lot of people want further training, or do trial internships or other things that might not be possible if they have fixed loan payment obligations after college, but yet might really be important in terms of the career you would like, or having a leg up a little further down the road," he said.
"From the government's point of view, it saves overhead costs in terms of managing. It also saves collections costs. The IRS is very good at what it does. We won't have to pay people, give them a commission, for going after defaulters and all that," he said.
Marian College President Josefina Castillo Baltodano presided over the meeting and expressed satisfaction that Petri had participated.
"What Congressman Petri has done is, he has always represented access and accountability and, in many cases, transformation of the political system to provide a more just political system," she said. "And so, by having Congressman Petri here today, it provides an opportunity for all of our community to have interaction with him and to share their thoughts and ideas, and vice-versa. It continues to promote the idea of engagement in the political process."