Florida Republican Sen. Marco Rubio has introduced a new student loan bill, inserting himself into an issue that has recently been the domain of Democrats.
The Dynamic Student Loan Repayment Act, introduced in collaboration with Democratic Sen. Mark Warner of Virginia, would significantly simplify the current system of public education loans implemented by the U.S. government.
“Our current loan repayment system often turns what should be reasonable debts into crippling payments,” the senators said in a joint statement. “No one should be forced to go broke because they choose to go to college.”
The bill would consolidate the three existing tiers of federal student loans into a single loan type. It would also automatically enroll all borrowers into an income-based repayment program that would put 10 percent of their post-graduation earnings towards debt repayment, with payments being automatically deducted from a borrower’s paycheck much as payroll taxes are today.
For those earning less than $10,000, no payment at all will be expected, and after 20 years debt amounts of less than $57,500 will be entirely forgiven. For amounts greater than that, 30 years will be required, in order to discourage people from cavalierly taking on large loan amounts.
All new student loans would be issued under the new system, while current graduates would have the option to switch to the new system.
The bill would continue the recently implemented procedure of tying student loan interest rates to U.S. Treasury bills, rather than used a fixed rate.
“This issue is personal for both of us,” Rubio and Warner said. “Neither of us could have attended college were it not for federal student loans. We both remember months when our paychecks were low and we weren’t sure if we could make our payments.”
Despite Warner’s involvement, the bill is likely a dead letter in the Senate for the time being with the chamber controlled by Democrats, who have supported a different proposal by Massachusetts Sen. Elizabeth Warren.
However, by presenting the bill Rubio lays the groundwork for possible Republican or bipartisan action in the future, and also positions himself as a major Republican thinker on the issue with the presidential race set to begin next year. The issue of student loans appeals especially to young people, whose support the Republicans must win a greater amount of if they hope to reclaim the White House.
This isn’t the first time Rubio has become involved with the issue. Last April, he suggested letting students contract with third parties to have their educations paid for in exchange for a percentage of future earnings, as an alternative to taking out loans.
Student loans have become an increasingly pressing issue in the United States as outstanding student debt has nearly quadrupled to almost $1.2 trillion in the past decade. Student loans are now estimated to be the second-largest source of debt in the United States, ahead of credit card debt and behind only home loans.
With loan amounts rising, so are defaults, which can be especially crushing for borrowers since student loans cannot be discharged in bankruptcy.
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