Rep. Wild Reintroduces Landmark Legislation to Simplify Student Loans

Washington, D.C. — Today, U.S. Representative Susan Wild reintroduced the Simplifying Student Loans Act to reduce the financial burden on current and future borrowers by restructuring the federal student loan repayment system.

The federal student loan system is failing borrowers, taxpayers, and our economy. Americans hold more than $1.5 trillion in student loan debt, and federal loans account for much of this debt. Many Americans are at risk of defaulting on their student loans because of high interest rates and unaffordable monthly loan payments. Despite years of effort, borrowers often struggle to make progress paying off their debt. Exacerbating these problems is unnecessary confusion caused by the federal government's numerous repayment plans. This system can result in borrowers choosing a plan that is not right for them and paying more money over the lifetime of their loan.

"Whether it's a four-year college, community college, or a technical school, we know higher education is a pathway to financial stability in America," said Rep. Wild. "But with prohibitively expensive tuition, students often must take out multiple loans to pay for college—each with its own interest rate and repayment schedule. I've heard heartbreaking stories of people drowning in student loan debt and owing more in loans 10 years post-graduation than immediately after earning their diploma. By making student loans easier to understand and cheaper, simpler, and quicker to repay, the Simplifying Student Loans Act will help solve these problems."

The Simplifying Student Loans Act would comprehensively overhaul the loan repayment process, help borrowers understand their repayment options so they can make an informed decision when picking a plan, and make it easier for borrowers to repay their loans without having unaffordable monthly payments. The bill replaces the numerous existing federal student loan repayment plans with two repayment options: one fixed repayment plan and one income-based repayment plan. Research shows that borrowers enrolled in income-based repayment plans have better outcomes, lower monthly loan payments, and are less likely to default on their student loans. In addition, this bill limits the amount of a person's monthly discretionary income that they must spend on student loan payments, which will ensure they can afford their monthly payments. Lastly, the bill will establish a one percent interest rate on federal student loans. This is significantly lower than the current average student loan interest rate and would help ensure that borrowers can make real progress on paying off their student debt. Altogether, these updates to our federal student loan system will strengthen our economy, reduce the strain on students and families by keeping borrowers on track to repay their loans, and enable borrowers to achieve their long-term financial goals. Read more about the Simplifying Student Loans Act HERE.

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