More than 43 million Americans are working to pay off federal student loan debt.
Federal student loan debt accounts for 90 percent of all student loan debt, according to a press release.
The Leveraging Opportunities for Americans Now (LOAN) Act, introduced July 27 in the U.S. House of Representatives by Rep. Elaine Luria of Virginia, would reform the federal student loan system and eliminate interest on federal student loans. By replacing interest rates with a financing fee paid over time, the LOAN Act will lower the cost of higher education.
“The current federal loan system has failed too many American families, leaving people with mounting debt from high-interest loans,” Luria said in the press release. “My legislation is designed to lower the costs of higher education, eliminate interest and ensure that we have a fairer system for loan repayment that benefits every American.”
The LOAN Act is the House companion to Sen. Marco Rubio’s Senate bill.
The legislation would replace the federal student loan interest rate with a lower cost fee, and provide an income-based repayment plan to ensure affordability effective July 1, 2022.
“The changes made would support the federal student loan borrowers by promoting simplification, transparency and automatic features in the student loan repayment process,” Michele Stockwell, Executive Director of Bipartisan Policy Center Action, said in the press release.
Borrowers currently enrolled in a program of study would be allowed to keep their existing loan or take the new loan option without interest. Borrowers can still choose the standard 10-year repayment plan.
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Rebecca Barnabi
