Student Loans Gain Prominence as HEA Reauthorization Looms and Election Day Draws Near

As the election year gears up, Democrats are once again putting the terms and conditions of student loans front and center with action coming from both the White House and the Senate. With control of the Senate, but not the House, legislative action is uncertain, but the White House is using its executive authority to ease the cost for borrowers with significant debt burden.

White House

On June 9, President Obama signed an executive order that would make more borrowers eligible for income-based repayment (IBR). The new Presidential Memorandum expands eligibility for IBR by allowing nearly 5 million additional federal direct student loan borrowers the opportunity to cap their student loan payments at 10 percent of their income. The proposal seeks to target borrowers who are at greater risk of defaulting on their loans.

Senate

The Senate Banking Committee, chaired by Senator Tim Johnson (D-SD), held a hearing on loan servicing hearing from witnesses who were concerned about difficulties borrowers face when repaying their loans, especially if they have loans with multiple servicers, or if their loan is sold to another servicer. Veterans found this an especially troublesome situation because of their unique military experiences and the fact that they receive funding from different agencies. Nancy Hoover, Director of Financial Aid and Student Employment at Denison University recommended that all servicers have the same processes, borrowers be able to access loan information from a single portal, and that servicers be judged on the number of borrowers who default and the dollar volume of those defaults. She also recommended that there be only two repayment options, standard and IBR.

The Senate Budget Committee, chaired by Patty Murray (D-WA), explored difficulties borrowers had in repaying their student loans and what this means for future life choices and the country’s economy. She and other Democrats on the Committee advocated for passage of S. 2432, a bill to enable borrowers of student loans to refinance both federal and private student loans at today’s rates. NAICU is supportive of the repayment section of the bill, authored by Senator Elizabeth Warren (D-MA)

As the election year gears up, Democrats are once again putting the terms and conditions of student loans front and center with action coming from both the White House and the Senate.  With control of the Senate, but not the House, legislative action is uncertain, but the White House is using its executive authority to ease the cost for borrowers with significant debt burden.

For more information, please contact:
Maureen Budetti