When a borrower defaults on their federal student loans, Kantrowitz said, the government currently can garnish up to 15 percent of their wages anyway, which is more than the 10 percent that would be taken out under Alexander’s proposal.
“Many borrowers who default have sufficient income to repay their debts, but just have difficulty managing their money,” Kantrowitz said. “There’s the potential for a lot of elegance in the design of student loan repayment via payroll withholding.”
However, Barmak Nassirian, director of federal relations at the American Association of State Colleges and Universities, called the proposal a “detour from real reform.”
“This is a system rife with fraud and predatory lending,” he said. Some borrowers might also have an issue, he added, with their employer knowing the details of their debt.