Plan might make more loans available

By Caryn Rosenberg

U.S. Sen. Paul Simon and Sen. Dave Durenburger’s proposed Income-Dependent Education Assistance (IDEA) credit plan could increase the number of loans available to students and make defaults a thing of the past.

IDEA is part of the tax bill voted out of the Finance Committee and includes four key elements.

The first is a universal loan plan, making the loan available to any interested student, regardless of income.

“The plan would provide a maximum of $5,000 per year for undergraduate students and a maximum of $15,000 per year for graduate students,” Simon said.

The plan also incorporates a direct loan structure which bypasses banks and other financial institutions, making colleges and universities the lenders.

The third key element of the plan is income-contingent repayment.

Instead of the current fixed monthly payment, the loan payback schedule would be based on the amount of the student’s income after graduation, Simon said. If the income falls below a certain level, no payment would be required and students would not be in default.

“It doesn’t force students to choose careers that are not necessarily in their best interest or the interest of society,” Simon said.

Finally, the plan offers repayment through IRS withholding instead of through monthly payments to banks.

The payback period for the loans is 25 years. “At the end of that time, if the amount is not paid back, (the debt) will be cancelled,” Simon said.

Simon said a 500-school voluntary sample will be chosen to “test” the program during the 1993-94 school year.

NIU President John La Tourette said he thinks the plan will benefit NIU. “I think it would be an important change which would provide more support for students,” he said.

In addition, La Tourette said the plan would eliminate the middleman so programs could be administered at less cost.