Press Releases

WASHINGTON –– Today, U.S. Sens. Mark Warner (D-VA), Todd Young (R-IN), Marco Rubio (R-FL), and Chris Coons (D-DE) reintroduced the ISA Student Protection Act to support an innovative financing tool for students pursuing postsecondary education. The bipartisan bill would protect students by applying strong consumer protections to Income Share Agreements (ISAs).

ISAs provide opportunities for students to design financial aid best suited to their needs based on their future income and job success. Under an ISA, a student agrees to pay a percentage of their income over a given time period in exchange for tuition payments from nongovernmental sources. When the agreed timeframe ends, the student stops payments regardless of whether the initial amount was paid back to the ISA funder. 

“Income-Share Agreements are a promising way to finance postsecondary education and an attractive alternative to private student loans and PLUS loans. ISAs are also proving to be uniquely responsive to the needs of students who are ineligible for existing federal student aid programs,” said Sen. Warner. “There are students across the country who are already benefitting from ISAs and deserve the safeguards and certainty the ISA Student Protection Act of 2022 would provide.”

“One thing we can all agree on is the importance of a quality and affordable education. As we face record-high inflation, many students and their families continue to face financial hardship and rising student loan debt,” said Sen. Young. “With the appropriate safeguards, ISAs can be an innovative, debt-free financing option for students of all backgrounds. Our bipartisan bill works to strengthen the framework for ISAs to help colleges and career and technical schools prepare students for success in the workforce at no cost to the taxpayer.”

“Everything is more expensive these days, especially the cost of a college degree. This common sense bill creates a debt-free financing option for students,” said Sen. Rubio.

“With trillions of dollars in U.S. student loan debt burdening the country’s workforce, Income Share Agreements are a useful alternative for some students who need financing for postsecondary education and training, especially where federal student aid is not available. The ISA Student Protection Act of 2022 will create legal certainty for providers who develop these innovative financial offerings while creating guardrails to protect students and workers as they prepare for the jobs that employers are looking to fill today and in the future,” said Sen. Coons.

This legislation is supported by Jobs for the Future, the Invest in Student Advancement Alliance, Student Freedom Initiative, the San Diego Workforce Partnership, FreeWorld, Better Future Forward, Purdue University, and more.

A full list of endorsement quotes is available here

The ISA Student Protection Act of 2022 would build on a previously introduced version of this legislation by updating existing consumer protection laws to ensure they are applied properly to ISAs and add new protections to ensure ISAs are affordable and share risk. Specifically, the bill:

  • Prohibits ISA providers from entering into agreements with students that require payments higher than 20 percent of income.
  • Exempts individuals from making payments towards their ISA when their income falls below an affordability threshold.
  • Sets a maximum number of payments and limits payment obligation to the end of a fixed window.
  • Sets a minimum number of voluntary payment relief pauses, during which payment obligations may be suspended.
  • Requires detailed disclosures to students who are considering entering into an ISA, including the amount financed, the payment calculation method, the number of payments expected, the length of the agreement, and how their payments under the ISA would compare to payments under a comparable loan.
  • Provides strong bankruptcy protection for ISA recipients by omitting the higher “undue hardship” standard for discharge required under private loans.
  • Prevents funders from accelerating an ISA in default.
  • Ensures that ISA obligations cease in the event of death or total and permanent disability.
  • Applies federal consumer protection laws (e.g., Fair Credit Reporting Act, Fair Debt Collection Practices Act, Military Lending Act, Servicemembers Civil Relief Act, Equal Credit Opportunity Act) to ISAs.
  • Gives the Consumer Financial Protection Bureau regulatory authority over ISAs.
  • Clarifies the tax treatment of ISA contributions for both funders and recipients.

Full text of the bill is available here.  

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WASHINGTON – U.S. Sen. Mark R. Warner (D-VA) today applauded the Senate passage of the Joint Consolidation Loan Separation Act of 2021, legislation to provide much-needed relief for individuals who previously consolidated their student loan debt with a spouse. Although Congress eliminated the program on July 1, 2006, it did not provide a means of severing existing loans, even in the event of domestic violence, economic abuse, or an unresponsive partner. As a result, there are borrowers across the country who remain liable for their abusive or uncommunicative spouse’s portion of their consolidated debts. This legislation provides relief to these individuals by allowing borrowers to split this debt.

“The Senate passage of this commonsense legislation is a huge step for survivors of domestic violence and financial abuse who have spent decades fighting for their financial freedom. By finally allowing individuals to sever their joint consolidation loans, this bill will provide needed respite to vulnerable individuals who are being unfairly held responsible for the debt of a former partner. I urge my House colleagues to act with urgency and send this bill to the President’s desk as soon as possible.”

The Joint Consolidation Loan Separation Act would allow borrowers to submit an application to the Department of Education to split the joint consolidation loan into two separate federal direct loans. The joint consolidation loan remainder – the unpaid loan and accrued unpaid interest – would be split proportionally based on the percentages that each borrower originally brought into the loan. The two new federal direct loans would have the same interest rates as the joint consolidation loan. Additionally, the bill would enable borrowers to access student loan relief programs, such as the Public Service Loan Forgiveness (PSLF) Program and income-driven repayment programs for which they were previously ineligible due to their joint consolidation loans.  

Sen. Warner authored the original version of the Joint Consolidation Loan Separation Act in 2017 after a constituent of his, Sara from McLean, Virginia, contacted him to communicate her struggles with a joint consolidation loan. Sara was raising two children on a public school teacher’s salary in Northern Virginia and trying to keep up with payments on her student loans. Unfortunately, her ex-spouse, whom she had divorced and moved thousands of miles away from to start fresh, refused to pay his share of their joint loan. Because joint consolidation loans create joint and several liability for borrowers, Sara faced the threat of having her wages as a public school teacher garnished if she did not pay both her and her ex-husband’s portions of their debt. Sen. Warner did not think this was fair and sought to create a solution, so that constituents like Sara could control their own financial futures. You can hear Sen. Warner tell Sara’s story here.

The Joint Consolidation Loan Separation Act has been supported by a number of organizations, including the National Network to End Domestic Violence, National Consumer Law Center, North Carolina Coalition against Domestic Violence, and the Virginia Sexual and Domestic Violence Action Alliance.

 

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WASHINGTON – Sen. Mark R. Warner (D-VA) today joined Rep. John Sarbanes (D-Md.), Sen. Tim Kaine (D-VA), Sen. Kirsten Gillibrand (D- NY) and more than 50 colleagues in calling on the Biden Administration to strengthen the Public Service Loan Forgiveness (PSLF) program and ensure that America’s teachers, social workers, public defenders, service members and community health care workers, along with many other public servants, receive the student loan forgiveness they have earned.

“Especially now, as our nation works to combat COVID-19 and build back better from this pandemic, the federal government must fulfill its promise to our public service workers who placed themselves in harm’s way to serve their community during this unprecedented time,” the lawmakers wrote. “The [U.S. Department of Education] has an opportunity to uphold the promise to our public servants by taking administrative action to provide them with relief.”

The lawmakers continued: “We urge you to take action to waive or modify counterproductive restrictions, barriers and donut holes in PSLF… We also urge the Department to take proactive steps to simplify the process, provide more transparency and bolster oversight of the program and loan servicers to ensure that the PSLF program is implemented in accordance with congressional intent.”

The lawmakers concluded: “We stand ready to work with you on this important issue. Now is the time to fix PSLF and finally allow the program to benefit the millions of dedicated teachers, nurses, first responders, service members and other public servants who have depended on this relief.”

See below for a full copy of the letter.

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The Honorable Miguel Cardona
Secretary of Education
United States Department of Education
400 Maryland Avenue SW
Washington, D.C. 20202 

Dear Secretary Cardona:

We write to urge the U.S. Department of Education (“Department”) to take immediate action to ensure that our public servants — many of whom are serving on the front lines of responding to the COVID-19 pandemic — are able to access the loan forgiveness they have earned by fixing the Public Service Loan Forgiveness (PSLF) program using the administrative flexibilities provided to you by Congress during periods of a national emergency.

Congress created the PSLF program in 2007 to provide student loan relief for those who are pursuing careers in public service, providing a benefit for the employees who devote their careers to helping their communities. Compensating our first responders, teachers, public health workers, nurses and other essential public servants by forgiving the remainder of their student debt after ten years of service ensures that those who wish to pursue these noble careers have a light at the end of the tunnel.

Unfortunately, previous implementation failures by the Department, complex program rules and widespread malfeasance by the student loan industry have precluded many from accessing this important benefit. After the first round of forgiveness initially became available to PSLF borrowers more than three years ago, approval rates for the program have remained below 2.5%. The program has been beset by numerous “donut holes” that disqualify certain types of loans, repayment plans and the payments themselves, leading to extraordinary confusion and distrust of the PSLF program and, by extension, the federal government.

We appreciate recent steps the Department has taken to improve the PSLF program, including streamlining the application process, posting more information online and revisiting rules around the calculation of lump sum and advance payments. However, more must be done.

Especially now, as our nation works to combat COVID-19 and build back better from this pandemic, the federal government must fulfill its promise to our public service workers who placed themselves in harm’s way to serve their community during this unprecedented time. The Department has an opportunity to uphold the promise to our public servants by taking administrative action to provide them with relief.

Accordingly, we ask that the Department invoke the Higher Education Relief Opportunities for Students (HEROES) Act of 2003, which provides authority to “waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV” during a period of national emergency. We urge you to take action to waive or modify counterproductive restrictions, barriers and donut holes in PSLF, including to:

1) Expand the definition of “eligible loan” to provide relief for borrowers with any type of federal student loan and prior payments on consolidation loans: Congress gave all borrowers with federal student loans of any type, including Federal Family Education Loans (FFEL), the right to convert their loans to Direct Loans and qualify for PSLF. However, loan borrowers have long struggled to take this preliminary step at the start of their careers — missing the opportunity to timely consolidate and instead being forced to restart the clock on their loans. To remedy this, the Department can expand the definition of an “eligible loan” under PSLF to include all federal student loans, including loans issued under part B, D or E of the Higher Education Act or under the Public Health Service Act. Further, the Department should deem payments made on component loans prior to any consolidation as qualifying for PSLF.

2) Expand the definition of a qualifying payment plan for all borrowers: At least 1.4 million borrowers are unknowingly enrolled in ineligible repayment plans after previously taking steps to get on track for PSLF. These problems are widespread. Borrowers have been deceived by student loan companies, provided incorrect information or enrolled by default in plans excluded from PSLF eligibility or that would otherwise limit their potential forgiveness. In 2018, Congress created the Temporary Expanded Public Service Loan Forgiveness Program (TEPSLF) as a limited fix for borrowers in the wrong repayment plan, including “graduated” and “extended” repayment plans, but unfortunately, this program has also been subject to unnecessary application barriers and very low approval rates. To remedy these issues, the Department should make all repayment plans eligible for PSLF.

3) Waive the restriction that a borrower be employed in public service at the time of forgiveness: Due to program errors, many federal student loan borrowers have unfortunately given up hope on PSLF. Some borrowers who have remained employed in public service are also not actively submitting paperwork because they are not eligible due to the aforementioned donut holes or believe themselves to be ineligible. Additionally, many public-sector jobs have been lost due to the pandemic, with millions still finding themselves still out of work as the economy recovers. Since the flexibilities we are requesting will expand the calculation of qualifying payments, borrowers who completed their 10 years of service while repaying their student loans should be newly eligible for forgiveness, regardless of whether they are currently employed in public service at the time of the forgiveness.

4) Establish data-sharing agreements to automatically qualify borrowers for PSLF using administrative data: While the current PSLF employment certification and application process requires borrowers to proactively submit information about their employer for the Department to determine potential eligibility, there are millions of employees for whom the Department could easily determine qualification for PSLF. The Department should establish secure data-sharing agreements with the Department of Defense and Office of Personnel Management to automatically identify public service workers who have outstanding federally held student debt. Furthermore, the Department should consider establishing similar data-sharing agreements with state governments that have employment records. For any borrower with a positive match to these databases, the Department should automatically calculate the number of qualifying payments in accordance with the above flexibilities.

After the Department has implemented the above flexibilities, borrowers should receive direct communications about these changes. For borrowers who have already expressed an interest in PSLF, the Department has existing capabilities to determine the number of eligible payments, regardless of whether employment certification has been provided. Qualifying payment counts should be updated in accordance with the new eligibility, similar to the Department’s recent implementation of lump sum and advance payment recalculations. A borrower whose newly calculated payments equal 120, or 10 years of service, should have their loans automatically canceled without any further paperwork. Borrowers who would newly be within reach of forgiveness but who need only certify their employment should receive extensive outreach from the Department to ensure they are aware of the new rules.

While these steps will help to address issues for past implementation failures, we also urge the Department to take proactive steps to simplify the process, provide more transparency and bolster oversight of the program and loan servicers to ensure that the PSLF program is implemented in accordance with congressional intent.

We stand ready to work with you on this important issue. Now is the time to fix PSLF and finally allow the program to benefit the millions of dedicated teachers, nurses, first responders, service members and other public servants who have depended on this relief.

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WASHINGTON – Today U.S. Sen. Mark R. Warner (D-VA) and U.S. Rep. David Price (D-NC) reintroduced bicameral, bipartisan legislation that would provide much-needed relief for individuals who previously consolidated their student loan debt with their spouse. While Congress eliminated the joint consolidation program in 2006, it did not provide a way for borrowers to sever existing loans, even in the event of domestic violence, economic abuse, or unresponsiveness from a former partner. The Joint Consolidation Loan Separation Act, cosponsored by Sens. Marco Rubio (R-FL) and John Cornyn (R-TX), would fix this oversight, which has unfortunately left too many borrowers liable for their former spouse’s student loan debt.

“Victims of domestic violence who flee their dangerous living situations shouldn’t find themselves burdened with their partner’s debt when trying to move forward with their lives. Unfortunately, that’s the reality for some Americans who are stuck with joint consolidation loans,” said Sen. Warner. “This commonsense bill would help a vulnerable population who’s been unfairly held responsible for their former partner’s debt, by giving them the ability regain their financial independence.” 

“This bill is a direct response to my constituent’s experience with a damaging joint consolidation loan. I introduced this bill to provide relief to borrowers who are victims of abusive or uncommunicative spouses by allowing them to sever these loans,” said Rep. Price. “The impact on borrowers is often crippling and I’m grateful for the bipartisan support that this common-sense bill has received. Congressional action is long overdue.” 

“Survivors of domestic violence should never have to pay the debts of their abuser,” Sen. Rubio said. “This legislation would provide financial independence to those survivors who previously consolidated their student loan debt with their partner. I am proud to join Senators Warner and Cornyn in reintroducing this legislation, and I urge my Senate colleagues to support this bill to deliver relief to these individuals.” 

“Victims of domestic abuse should never, ever be on the hook for an abusive partner’s debt,” said Sen. Cornyn. “I am proud to join this commonsense, bipartisan effort that will be key in helping vulnerable Texans, and others across the nation, regain their financial autonomy.”

Specifically, the Joint Consolidation Loan Separation Act would allow borrowers to submit an application to the Department of Education to split the joint consolidation loan into two separate federal direct loans. The joint consolidation loan remainder – the unpaid loan and accrued unpaid interest – would be split proportionally based on the percentages that each borrower originally brought into the loan. The two new federal direct loans would have the same interest rates as the joint consolidation loan.  

Each borrower would also have the ability to transfer eligible payments made on the joint consolidation loan towards income-driven repayment programs and the Public Service Loan Forgiveness program.  

The Joint Consolidation Loan Separation Act is supported by a number of organizations, including the National Network to End Domestic Violence, National Consumer Law Center, North Carolina Coalition against Domestic Violence, and the Virginia Sexual and Domestic Violence Action Alliance.

“When survivors escape abuse, they should be able to start over without the debts of their abusers. We applaud this bill for creating a solution for those survivors who consolidated loans either in good faith or under duress and are now rebuilding their lives,” said Monica McLaughlin, Director of Public Policy at the National Network to End Domestic Violence

“For far too long, many student loan borrowers have been stuck in joint consolidation loans, and this bill ensures that struggling borrowers, including survivors of domestic and economic abuse, who previously consolidated their student loan debts, have the opportunity to regain their financial footingWe applaud Senator Warner and Representative Price for their efforts. This bill would benefit many vulnerable student loan borrowers, and we are proud to support it,” said Persis Yu, Director, Student Borrower Assistance Project for the National Consumer Law Center.

“Survivors of domestic violence in North Carolina face many barriers when they decide to leave an abusive relationship; shouldering the burden of an abusive partner’s debt should not be one of them. We applaud Congressman Price for filing this bill and helping survivors get one step closer to regaining rebuild their lives and regain their financial independence,” said Kathleen Lockwood, Legal & Policy Director at the North Carolina Coalition Against Domestic Violence. 

“The Action Alliance is pleased to support these efforts to provide victims of domestic and economic abuse with student loan relief. This bill will make a difference for people who need it, and I hope Congress will move swiftly to enact it,” said Jonathan Yglesias, Policy Director at the Virginia Sexual and Domestic Violence Action Alliance.

A copy of the one-pager can be found here. A copy of the bill text and be found here.

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