When borrowers reach that threshold, they pay a flat 9 percent of any income more than 21,000 pounds until the loan is paid in full or forgiven.
"In Great Britain – one of the major economies that has a similar system – 98 percent of borrowers are meeting their obligations," U.S. Rep. Tom Petri of Wisconsin said in an April statement announcing the Earnings Contingent Education Loans Act. The bill calls for universal income-based repayment on all federal student loans and automatic payments via employer withholding.
"It's pretty simple if you think about it," Petri said. "When students graduate from college, traditionally they will make less. And then as they progress in their professional career they'll earn more. The repayment schedule should follow this trend so that borrowers pay less early on and more as they earn more."
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