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U.S. Senator Tammy Baldwin Helps Introduce Legislation to Ensure Affordable Student Loans for Every Borrower

WASHINGTON, D.C. – U.S. Senator Tammy Baldwin joined her colleagues this week in introducing the Affordable Loans for Any Student Act of 2018, led by Senator Jeff Merkley (D-OR), to ensure affordable, simple income-based repayment plans for any federal student loan borrowers.

“Higher education should be a path to prosperity, not a path into suffocating debt, but right now student loan debt is holding back an entire generation and creating a drag on economic growth in Wisconsin and across the country,” said Senator Baldwin. “This legislation will help bring relief to Wisconsin students and families by ensuring there is a repayment plan that works for them. It’s past time for Washington to take action to give Wisconsin students a fair shot at getting ahead and building a stronger future for themselves.”

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.

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.

The legislation is also cosponsored by Senators Debbie Stabenow (D-MI), Kirsten Gillibrand (D-NY), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Ben Cardin (D-MD) and Catherine Cortez Masto (D-NV).

This Affordable Loans for Any Student Act of 2018 is supported 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!”