Student Loan debt in the U.S. recently crossed the $1 trillion mark, with a good chunk of that owed to the U.S. government. In an attempt to streamline the whole process, a soon-to-be-introduced bill would replace the current system of debt collection with automatic payroll deductions tied to the borrower’s income.

Similar systems are already in place in the U.K., Australia, and New Zealand, and Wisconsin Representative Tom Petri plans to introduce the idea to Congress as soon as this week, reports Bloomberg.

Rather than paying huge fees to third-party bill collectors, the government would debit borrowers’ paychecks at an amount capped at 15% of income after basic living expenses.

“This doesn’t mean leaving taxpayers on the hook if a student borrows too much — everyone would still pay back what they borrow under this system,” Petri explains to Bloomberg. “It does mean providing much stronger protections against the kind of financial ruin that is all too prevalent in our current system.”

Proponents of the idea say it would not just save the government billions by collecting the debts directly, it would also remove all the red tape currently involved in applying for existing income-related payment plans or deferral programs.

Citing the example of the UK program, Petri claims that 98% of student loan borrowers would be able to make their loan payments through his proposed automatic payment system.

In addition to the income-related cap on payments, the bill would tie the interest rates to Treasury market rates and would cap interest owed at 50% of a loan’s face value at the time of graduation.

This is a boon for borrowers who do not go into higher-paying jobs and would require a longer period of time to pay off the debt.

Of course, this all comes with a cost. Bloomberg reports that some student-loan subsidies aimed at lower-income borrowers would be eliminated:

Low-income borrowers would no longer be excused from accruing interest when they are in college. The bill would also eliminate income-based programs that forgive loans entirely after 20 or 25 years — and, after 10 years, for those who enter public-service careers, such as teaching or law enforcement. The new system would apply only to new loans.

This is all just the beginning of what will likely be a hotly debated bill. Petri’s office expects that it will come up for consideration in early 2013.

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