October 11, 2018

Cardin, Senate Democrats Introduce Legislation to Ensure Affordable Student Loans for Every Borrower

WASHINGTON – Senator Ben Cardin (D-MD) today joined Senate Democrats in introducing the Affordable Loans for Any Student Act of 2018, comprehensive legislation that would ensure affordable, simple income-based repayment plans for any federal student loan borrowers.

Cardin was joined on the legislation by Senators Jeff Merkley (D-OR), Debbie Stabenow (D-MI), Kirsten Gillibrand (D-NY), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Brian Schatz (D-HI) and Catherine Cortez Masto (D-NV).

The average college senior who has taken out loans now graduates with more than $30,000 in debt, and total student debt nationwide has topped $1.5 trillion, creating a significant drag on the economy. Many borrowers would benefit from a simple repayment plan based on their income, with a clear light at the end of the tunnel. Currently, however, there are at least five income-based repayment plans and dozens of confusing iterations. As a result, far too many borrowers fail to discover or successfully maintain income-based repayment until it’s too late. The Affordable Loans for Any Student Act would overhaul and fix this dysfunctional system, streamlining existing programs and creating just two simple and easy-to-understand options for borrowers to choose from and avoid loan delinquency or default.

“Allowing students to drown in debt hurts our economy and society in the long run. The process of repaying student loans should not be a cumbersome burden to overcome,” said Cardin. “This legislation will help to simplify student loan servicing, ensure that public servants have a better understanding of the path to Public Service Loan Forgiveness, and create more informed borrowers who better navigate the student loan repayment system.”

“Higher education should create a path to opportunity, not a millstone of debt hanging around young Americans’ necks,” said Merkley. “Right now, our student debt crisis is holding our whole nation back. Many young Americans are putting off buying houses, starting businesses, or even starting a family because of their student loan burden. It’s bad for our communities and terrible for our economy. Isn’t it time we had a simple, easy-to-use repayment system that ensured every student has an affordable loan option?”

“Thousands of New Yorkers began their college education this fall, and many of them will already be buried in student debt by the time they graduate. Congress has to fix our student debt crisis now. We need to make it easier for student borrowers to repay their loans, and we should streamline the process to make repayment affordable and attainable,” said Gillibrand. “I am proud to be a cosponsor of the Affordable Loans for Any Student Act of 2018, which would create a fixed repayment plan and an income-based repayment plan for our student loan borrowers. I urge my colleagues to join me in supporting this legislation, and I will continue fighting in the Senate to end our student debt crisis once and for all.”

“There is a student debt crisis in America and Wisconsin students need a fair shot at getting ahead and building a stronger future for themselves,” said Baldwin. “This legislation will help bring relief to Wisconsin students and families by ensuring there is a repayment plan that works for them. When we take action to address to student loan debt we can help create stronger economic growth.”

“This bill would cut the red tape and reduce the financial burden that far too often stands in the way of young people paying for their college degree,” said Blumenthal. “The Affordable Loans for Any Student Act reforms the student loan repayment process, opening new doors of opportunity for millions of Americans and making it easier for students to pay off their student loans as they pursue the American Dream.”

“Education should lead to opportunities, not debt,” said Schatz. “While we continue working to bring down the cost of college, we need to make it easier for people to repay their student loans and get out of debt. Our bill would provide people with some relief from crushing debt and give them the chance to make loan repayments they can afford.”

“Americans should not have put off purchasing a home or starting a family because they’re saddled with thousands of dollars in student loan debt,” said Cortez Masto. “This legislation provides student loan borrowers with straightforward options to repay their loans in a reasonable period of time and without unnecessary fees. It will begin to lift the $1.5 trillion dollar burden of student loan debt off Americans’ shoulders, put more money back in the pockets of families, and strengthen our economy.”

The Affordable Loans for Any Student Act of 2018 would overhaul the confusing system of income-based repayment plans to give borrowers a simple choice between two plans:

  • A Fixed Repayment Plan with equal monthly payments sufficient to repay the loan and any accrued interest over a period of 10 years; or
  • An Income-Based Repayment (IBR) Plan in which a borrower pays 10 percent of their income above a poverty level, capped at 20 years of payments. 

In addition to streamlining repayment plans for borrowers, the bill:

  • Ends interest capitalization and origination fees on all loans, which can add thousands of dollars to a borrower’s total payments over the life of the loan.
  • Targets assistance to struggling and low-income borrowers.
  • Allows for automatic recertification of income for IBR plans.
  • Limits aggressive federal debt collection amounts that are obtained through wage garnishment or tax offset to no more than the amount the borrower would pay under IBR.
  • Replaces the current deferment and forbearance options into one, streamlined “pause payment” process that does not capitalize interest.
  • Provides relief to severely delinquent borrowers and those who rehabilitate their loans by automatically enrolling them into the IBR plan.
  • Changes the use of the confusing term “master promissory note” to “student loan contract” to improve consumer understanding of the purpose of the document.
  • Improves other loan disclosures and interactive counseling.

This legislation is officially endorsed by The Institute for College Access & Success (TICAS), Higher Education Loan Coalition, Young Invincibles, Association of Community College Trustees (ACCT), American Association of Community Colleges (AACC), and the National Consumer Law Center (on behalf of its low-income clients).

“When one in four federal student loan borrowers are delinquent or in default, the Affordable Loans for Any Student Act stands out as the reform borrowers urgently need—reducing the costs and burden of student debt, simplifying and improving repayment options, and reducing the likelihood of default,” said James Kvaal, President, The Institute for College Access & Success (TICAS). “We applaud Senator Merkley for his continuing leadership on strengthening income-driven repayment to better serve struggling borrowers and urge Congress to follow suit.”  

“Young Invincibles is happy to support the Affordable Loans for Any Student Act,” said Reid Setzer, Government Affairs Director, Young Invincibles. “The bill would dramatically simplify America's student loan system, making it easier for borrowers to enroll in the best repayment plan for them. Making it easier to enroll and stay enrolled in income-based plans helps create a more equitable system for borrowers. The bill also offers borrower-friendly terms to millions seeking relief from staggeringly high monthly payments. We urge Congress to enact this important piece of legislation.” 

“The Higher Education Loan Coalition endorses this important legislation that will decrease the cost of borrowing and simplify repayment of student and parent loans,” said Jean McDonald Rash, Chair, Higher Education Loan Coalition. “The elimination of origination fees and capitalization of interest ensures that borrowers receive a fair deal from their government student loans. Borrowers will receive improved counseling and targeted, consumer friendly information to allow them to understand their total loan repayment before they assume too much debt. Once in repayment, their ability to manage their debt through simplified repayment plans will vastly improve. This bill is good news for student and parent borrowers in every step of the loan cycle!”

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