Today, Senator Mark R. Warner joined Senators Angus King (I-Maine) and Richard Burr (R-N.C.), along with Marco Rubio (R-Fla.), Susan Collins (R-Maine) and Lamar Alexander (R-Tenn.), in introducing legislation to reform federal student loan repayment programs. The Repay Act, which Senators King and Burr originally introduced last Congress, would simplify the complex maze of federal student loan repayment programs by consolidating many of the benefits of current repayment programs into two plans: a fixed repayment plan, based on a 10-year period, and a single, simplified income-driven repayment option.
“The federal government’s student loan repayment programs, although well-intentioned, have grown to be complicated and confusing and do not serve the interests of America’s students or America’s taxpayers,” Senator King said. “The government should be making it easier for students to pursue their dreams after graduation – not saddle them with the added anxiety of combing through perplexing government forms. This bipartisan proposal simplifies loan repayment by consolidating many of the benefits of the existing plans, making it easier for students to decide which option best fits their needs, and lowering the chance they will fall behind on their payments.”
“North Carolinians are tired of seeing their hard-earned tax dollars go to waste in a student loan program that serves neither their interests nor those of the college students it is intended to help. That is why Senator King and I are reintroducing the Repay Act,” said Senator Burr. “The Repay Act has two very simple goals: First, students should be presented with clear options on how to repay their student loan debts affordably and in a straightforward manner. Second, taxpayers should no longer subsidize the excessive borrowing and loan forgiveness that Washington has allowed to take place over the past few years. Although more can be done to address the deficiencies in our student loan programs, the Repay Act is a responsible step in the right direction toward better fiscal management of our loan programs that allows students to make well-informed decisions about borrowing for college. I look forward to working with my colleagues Senators King, Alexander, Warner, Rubio, and Collins to see the Senate pass this legislation to make repaying student loans simpler and fairer.”
“The Repay Act streamlines the federal loan program and ensures that graduates have affordable payment options in a way that is simple and intuitive,” Senator Warner said. “This bill incorporates several of the concepts Senator Rubio and I put forward last Congress, and I am encouraged to join this bipartisan group of colleagues in advocating for these much needed reforms as we look to reauthorize the Higher Education Act. Virginia students, graduates, and families are looking for student loan reforms that allows them to meet their obligations while also providing necessary protections.”
“Helping more people achieve the American Dream requires equipping them with the education and training necessary to do the jobs of the 21st century. The Repay Act would help modernize the income-based repayment system for student loans, which Senator Warner and I have also been working on for the past year. We need reforms like this to ensure that the burden of student loans is more manageable to discourage overborrowing,” Senator Rubio said. “I believe this bill’s requirement for the GAO to study the best way enroll, verify income and facilitate income-based repayment programs will ultimately help build momentum for other initiatives I will continue working on as the Senate considers higher education reform later this year.”
“Education plays a vital role in opening the doors of opportunity to all Americans, but the rising cost of a college education threatens to close those doors to lower-income families. Having worked at Husson University in Bangor, I know first-hand how critical financial aid is to students and their families,” said Senator Collins. “This legislation would help students and their families determine which repayment system works best for them, and helps ensure that higher education is accessible to students.”
“The mess of federal student loan repayment programs only creates confusion for our 8 million student borrowers, causing more borrowers to fall behind on their payments or go into default,” said Senator Alexander, Chairman of the Health, Education, Labor and Pensions Committee. “This plan from Senators Burr and King will make the process of student loan repayments simpler and more manageable for our college graduates.”
Current graduates face a maze of federal student loan repayment programs from which to choose that often leave students confused about which program best fits their needs. In addition, due to years of changing eligibility terms and the introduction of new programs, little has been done to ensure that taxpayer dollars are not misdirected in subsidizing borrowers who do not need additional assistance.
The Repay Act addresses those issues to make loan repayment more affordable for the middle class by eliminating duplicative repayment options, streamlining eligibility terms, and ensuring that borrowers will never direct more than 15 percent of their discretionary income to their loan payments.
The proposal also ends the disproportionate federal subsidization of loan payments for high income borrowers and sets parameters for the amount of debt that can be forgiven over certain periods of time. Importantly, the Repay Act also eliminates a provision in the tax code that requires borrowers whose loans are forgiven due to total and permanent disability to pay tax on the discharged debt.
These are commonsense changes supported by broad groups of stakeholders who want to see these programs become sustainable and user-friendly. This legislation is estimated to save taxpayers hundreds of millions of dollars over the next decade.