Senate Health, Education, Labor, and Pensions Committee Chair Lamar Alexander (R-Tenn.), on July 21, introduced the Student Loan Repayment and FAFSA Simplification Act (S. 4247), addressing potential Higher Education Act reauthorization and student loan payments during COVID-19.
While introducing the legislation on the Senate floor, Sen. Alexander said, “I was hopeful the Senate Health, Education, Labor, and Pensions Committee would mark up a higher education reauthorization bill this past spring. But between impeachment and COVID, that just didn’t work out.”
“The solution I am proposing today has been discussed by our committee and many bipartisan senators outside the committee for nearly six years,” he said [see Washington Highlights, Dec. 12, 2019].
The legislation would consolidate repayment plans to just two: a 10-year standard and an income-driven repayment (IDR) plan. Payments from the IDR plan would be determined by calculating 10% of the borrower's discretionary income, according to Chairman Alexander’s floor statement.
He added that Public Service Loan Forgiveness (PSLF) would be awarded to borrowers who make 120 on-time payments in either repayment program. Borrowers who choose the IDR plan would also have all outstanding payments forgiven after 25 years.
The legislation also addresses the Sept. 30 expiration of the moratorium on student loan payments and interest accrual that was established in the Coronavirus Aid, Relief, and Economic Security Act (CARES, P.L. 116-136).
The bill would allow borrowers who aren’t earning income to be eligible for zero-dollar student loan payments for either plan until they start earning income. The zero-dollar payments would count as eligible payments towards PSLF.
Meanwhile, the House of Representatives passed amendments to the William M. (Mac) Thornberry National Defense Authorization Act of 2021 (NDAA, H.R. 6395) that addresses student loan issues in the wake of the COVID-19 pandemic.
The House passed an amendment introduced by Rep. Alma Adams (D-N.C.) that would extend the current moratorium on student loan payments and interest accrual, established in the CARES Act, until Sept. 30, 2021. This amendment echoes language included in the House-passed Heroes Act (H.R. 6800) [see Washington Highlights, May 15].
An amendment introduced by Rep. Madeleine Dean (D-Pa.) that would provide $10,000 in student loan forgiveness for borrowers with privately held loans was passed by a mostly partisan vote of 217-198. A similar proposal was removed from the Heroes Act due to potential costs.
Both the House and Senate proposals may be addressed in the next coronavirus relief package.
- Washington Highlights