Burr, King Renew Bipartisan Effort to Reform Student Loan Repayment Programs
Commonsense fix simplifies federal student loan repayment programs to preserve interests of graduates, families, and American taxpayer
Today, Senators Richard Burr (R-NC) and Angus King (I-ME) reintroduced the Repay Act, bipartisan legislation to reform federal student loan repayment programs. This legislation simplifies and streamlines the current repayment programs by establishing two, easy-to-navigate repayment plans: a fixed, 10-year repayment plan and a single, simplified income-driven repayment option.
“The rise in federal student loan debt has been a cause for concern for years, but the issue has taken on a new urgency given the economic challenges of the coronavirus pandemic,” said Senator Burr, Ranking Member of the Senate Health, Education, Labor and Pensions Committee. “As the American economy begins to recover, it’s more critical than ever that Congress address the current, overly-complicated student loan repayment system and propose simpler, more effective solutions.
“That’s why Senator King and I are reintroducing the Repay Act, a commonsense, bipartisan solution with two key goals. First, it simplifies the repayment process by establishing two repayment plan options that are easier to navigate and more predictable for students and their families. Second, it limits the number of taxpayer-funded subsides, which incentivize over-borrowing and drive up program costs. Although much more needs to be done to address the underlying factors of increased student loan debt, this commonsense, bipartisan bill is a sustainable policy change that promotes fiscal responsibility and helps borrowers determine which system works best for them.”
“The coronavirus pandemic’s economic effects destroyed millions of jobs across the nation, compounding the financial worries of Americans who are working to pay back their student loans,” said Senator King. “In the face of these added pressures, it is more important than ever that Congress acts to simplify the loan repayment process for the students who borrow money to invest in their futures. Our bipartisan bill establishes two clear repayment plans, helping students better understand the choices, evaluate which option is right for them, and make payments at a realistic level. This legislation will make the repayment process easier, and should be considered as part of the federal government’s work to address the challenges posed by America’s student debt crisis.”
Currently, student loan borrowers have multiple federal student loan repayment plans from which to choose. This maze of options often leaves students confused about the plan that best fits their needs. Over the last decade, updated eligibility terms and new, added programs have further complicated the process. As a result, taxpayer dollars have been misdirected to subsidize borrowers who do not need additional assistance.
The Repay Act is a commonsense solution to make loan repayment more affordable to the middle-class by removing duplicative repayment options, streamlining eligibility terms, and ensuring borrowers never direct more than 15 percent of their discretionary income to their loan payments. Additionally, this legislation ends the disproportionate subsidization of loan payments for high income borrowers and sets limits for the amount of debt that can be forgiven over a certain amount of time.
Significantly, this legislation is estimated to save taxpayers billions of dollars over the next decade.
The Repay Act is supported by the Bipartisan Policy Center Action and the National Association of Student Financial Aid Administrators.
Senators Burr and King previously introduced this legislation in 2015 and 2017.
To read more about the Repay Act, click here.
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