U.S. Sens. Mark R. Warner (D-VA) and Marco Rubio (R-FL) today introduced The Dynamic Student Loan Repayment Act to consolidate, simplify and improve income-based repayment options for federal student loans. With the bipartisan Warner-Rubio proposal, federal student loan payments would be automatically adjusted based upon income. Borrowers will be able to repay loans at a more affordable pace and with more manageable payments, providing relief to those who worry about how they will repay their debt just as they are getting started in the workforce.
“On average, today’s graduates carry nearly $30,000 in student loan debt. But our current loan repayment system often turns what should be reasonable debts into crippling payments. Some graduates are forced to work multiple jobs, often in fields they didn’t train for, simply to keep from defaulting on these loans,” Sens. Warner and Rubio said in a joint statement. “Current income-driven repayment plans are underutilized because the system is so complicated. Our proposal doesn’t just layer another option on top of existing plans. Instead, it will streamline the current repayment options into a simpler, user-friendly repayment plan, one that automatically adjusts to the changes in a borrower’s income with none of the hassle or paperwork required in the current system.”
Total U.S. student loan debt now tops $1.2 trillion, eclipsing credit card debt as the largest financial obligation of U.S. households. Last month, the U.S. Senate failed to advance a proposal that would have lowered interest rates charged on many pre-existing student loans, and this issue remains a critical priority of many borrowers, their families and policymakers.
“The growth in student debt has been really dramatic… When you look at the numbers on student debt, it has to be a significant concern,” Federal Reserve Chair Janet Yellen said during Tuesday’s meeting of the Senate Banking Committee
Last year, Sens. Warner and Rubio partnered on another bipartisan proposal to address growing concern about the rising cost of higher education. With Sen. Ron Wyden (D-OR), the senators introduced The Student Right to Know Before You Go Act of 2013, which would change college reporting guidelines so future students could compare schools’ graduation rates, average college loan debt, and future potential earnings for particular areas of study.
“This issue is personal for both of us,” Sens. Warner and Rubio said. “Neither of us could have attended college were it not for federal student loans. We both remember months when our paychecks were low and we weren’t sure if we could make our payments. Each of us has heard from constituents affected by crippling student debt. Our Dynamic Student Loan Repayment Act will provide an additional tool to help borrowers meet their obligations, and this must be part of a broader conversation about how to make higher education more affordable.”
A summary of the Dynamic Student Loan Repayment Act is available here and the legislation is available here.