Source: United States Senator for Florida Marco Rubio
It’s time for a new approach to student loans
By Senator Marco Rubio
September 19, 2021
…Loan cancellation would mean hundreds of billions of dollars shelled out without congressional authorization. That money would come from 200 million American taxpayers, including those who already repaid their loans and those who decided not to pursue a college degree, who would subsidize some of our nation’s wealthiest Americans. Not only is it wrong, but it would do nothing for our nation’s future student borrowers.
In short, the Democrats’ proposal is expensive, unsustainable, grossly unfair and counterproductive. It represents a giveaway to our nation’s most educated at the expense of others, but also an inadequate fix to a perpetual problem.
It is important to recognize, however, that there is a need for action. Today, millions of Americans are drowning in student loan debt and that problem is only getting worse.
My LOAN Act provides the right answer.
The legislation would reform our federal direct student loan system by eliminating interest and replacing it with a one-time, non-compounding financing fee paid out over the life of the loan. No more inflated, compounding interest rates that obscure the true cost of college loans.
The LOAN Act would help borrowers by taking the unique financial circumstances of the borrower into consideration. With an income-based repayment (IBR) plan as the default option, new graduates would not suddenly be swamped with monthly repayments they cannot afford.
The LOAN Act has garnered support from United Negro College Fund president, Dr. Michael L. Lomax, who described it as “a strong and robust proposal,” noting that “low-income students would fare better under the repayment system [it] creates versus our current structure.”
And the Bipartisan Policy Center said the income-based repayment plan “would support federal student loan borrowers by promoting simplification, transparency, and automatic features in the student loan repayment process.”
Student debt is not going away, and simply wiping the slate clean for Americans currently grappling with it is not an enduring solution. But we can have a more transparent system that does not trap Americans looking to pursue an education with exploding interest payments and unmanageable burden. The system needs real reform, and my LOAN Act offers the right way forward.
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