Taylor Luckey Brennan contributed to this post.
The old standard for student loan repayment just got schooled.
The Bipartisan Policy Center commends Senators Marco Rubio (R-FL) and Mark Warner (D-VA) for introducing the Dynamic Repayment Act of 2014. The bipartisan legislation was introduced to “simplify and improve the Federal student loan program through income-contingent repayment to provide stronger protections for borrowers, encourage responsible borrowing, and save money for taxpayers.” BPC applauds the Senators’ efforts to address a top concern among the millennial generation.
Under the proposed bill, all federal loan borrowers will be automatically enrolled in an income-based repayment program. The program, previously in existence but drastically underutilized, directly transfers 10 percent of the borrowers’ annual incomes from their monthly paychecks towards repayment of their debt, with an annual $10,000 income exemption clause. Those who select to prepay their loans can opt out of the new standard, choosing to pay off their loans on a faster, individualized timeline. The senators hope that the bill’s simplified payment method will limit the risk of debt default and make loan repayment more manageable- goals that both Republicans and Democrats can get behind.
Senators Rubio and Warner expressed concern over the current student loan system, both citing their own struggles to repay law school debts as experiences that encouraged them to pursue change. As the outstanding student debt climbs to a staggering $1.2 trillion, this issue hits home for millions of American students, both those hoping to pay off already accumulated debt and those either currently or not yet enrolled who are wondering how they will afford their education. A less burdensome loan repayment system could make college a feasible option for more Americans. Senators Rubio and Warner remind us that members of Congress can transcend partisan boundaries to develop smarter proposals for America.
From the Americans with Disabilities Act to Campaign Finance Reform to No Child Left Behind and more, many significant legislative achievements have been successful due to cross-party collaboration. Rather than lamenting cooperation as a relic of days gone by, the Bipartisan Champions series will highlight current lawmakers who are working across the aisle and getting things done. By showcasing those who are putting partisan differences aside in order to put national interests first, BPC hopes to encourage more of this activity among our elected leaders in Washington, DC.