Senators Merkley, Hassan, and Chair DeLauro Introduce Legislation to Secure Affordable Student Loans for Every Borrower

Washington, D.C. – Oregon’s U.S. Senator Jeff Merkley, New Hampshire’s U.S. Senator Maggie Hassan, and House Appropriations Chair Rosa DeLauro (CT-03) today announced the introduction of the Affordable Loans for Any Student Act of 2022, comprehensive legislation that would ensure affordable, simple income-based repayment plans for all federal student loan borrowers.

The Affordable Loans for Any Student Act of 2022 would give all federal student loan borrowers an option to structure their loan so that they pay 10% of any income they earn above the poverty level until their loan is paid off or until they have made 20 years of payments, whichever comes first. That option would give borrowers the flexibility to pursue public service, artistic careers, entrepreneurial initiatives, or other lower paying jobs without fear of defaulting on loans.

“Higher education should create a path to opportunity, not a ball and chain of debt hanging around young Americans’ necks,” said Merkley. “I come from a blue-collar family and am a first-generation college graduate. I know firsthand that affordability is a major factor—in fact, often the biggest factor—in whether middle class students are able to obtain the benefits of higher education. Right now, our student debt crisis is holding our whole nation back. Many young Americans are putting off buying houses, starting businesses, or even starting a family because of their student loan burden. This is bad for our communities and terrible for our economy. It’s time we had a simple, easy-to-use repayment system that ensured every student has an affordable loan option.”

“Student loan debt is burdening young Americans and dragging our economy down with it,” said Hassan. “This commonsense bill will help make it easier for borrowers to make their payments while giving them the freedom to pursue their careers – whether that is to start their own business or enter into public service. We must take action to help ensure that borrowers are not crushed by the weight of student debt, and this bill is one important step to help do just that.”

“Every young person in America should have the opportunity to get a good education without getting trapped into a lifetime of student loan debt,” said Congresswoman Rosa DeLauro. “Young college graduates with good jobs are struggling to make the first big investments in their lives like buying a home, or even to purchase necessities and pay rent because of the debt that they hold. For our next generation to fulfill their dreams, contribute to economic innovation and create a prosperous future for themselves and their families, we must simplify the repayment process and make it more affordable for student borrowers. Congress has an obligation to solve it, which is why I am proud to introduce the Affordable Loans for Any Student Act with Senators Merkley and Hassan.”

The average college senior who borrows now graduates with nearly $30,000 in debt and total student debt nationwide sits at $1.6 trillion and growing. Borrowers with federal student loans also face few easy choices in managing their debt, from being forced to navigate unnecessary fees to a maze of repayment plans, paperwork, and confusing terminology. There are at least four income-based repayment plans and dozens of confusing iterations, which, unfortunately, results in far too many borrowers failing to discover or successfully maintain income-based repayment until it’s too late.

Specifically, the Affordable Loans for Any Student Act of 2022 would overhaul the confusing system of income-based repayment plans to give borrowers a simple choice between two plans:

  • A Fixed Repayment Plan with equal monthly payments sufficient to repay the loan and any accrued interest over a period of 10 years; or
  • An Income-Based Repayment (IBR) Plan in which a borrower pays 10 percent of their income above a poverty level, capped at 20 years of payments.

In addition to streamlining repayment plans for borrowers, the bill:

  • Ends interest capitalization and origination fees on Federal Direct Loans.
  • Targets assistance to struggling and low-income borrowers.
  • Allows for automatic recertification of income for IBR plans.
  • Limits federal debt collection amounts that are obtained through wage garnishment or tax offset to no more than the amount the borrower would pay under IBR.
  • Replaces the current deferment and forbearance options into one, streamlined “pause payment” process that does not capitalize interest.
  • Provides relief to severely delinquent borrowers and those who rehabilitate their loans by automatically enrolling them into the IBR plan.
  • Changes the use of the confusing term “master promissory note” to “student loan contract” to improve consumer understanding of the purpose of the document.
  • Improves other loan disclosures and interactive counseling to make students more aware of federal student aid and repayment options.

The Affordable Loans for Any Student Act is officially endorsed by The Institute for College Access & Success (TICAS) and Consumer Action.

“While completing a college degree remains a strong investment for most, far too many students struggle with student loan repayment,” said Sameer Gadkaree, President, The Institute for College Access & Success. “The Affordable Loans for Any Student Act will make repayment more affordable, help prevent default, and simplify repayment options. We applaud Senator Merkley and Chair DeLauro for their leadership on this bill.”

“Even the most savvy student loan borrowers can have problems navigating their repayment options,” said Linda Sherry, Consumer Action’s director of national priorities. “The Affordable Loans for Any Student Act would ensure loan terms are written in consumer-friendly language, simplify income-based repayment, and limit aggressive debt collection practices. The bill provides incentives for more reliable, affordable repayment choices.”

Senator Merkley has been a long-time leader advocating for the protection and support of student loan borrowers. Through his work protecting students from worthless degrees, to being a leading voice urging the Biden Administration to extend the pause on student loan payments and forgive student loan debt, Merkley has consistently fought for the financial futures of student loan borrowers. The Affordable Loans for Any Student Act will help protect borrowers and create manageable loan payments on any balance borrowers may have on their loans. Should President Biden use his executive powers to cancel federal student loan debt up to a set amount per borrower, many borrowers will still have a remaining balance to pay off. This bill will help ensure student loan borrowers with any balance, from any background, with any amount of their loan forgiven will have manageable and affordable payments on their existing loans.

In addition to Merkley, Hassan, and DeLauro, the Affordable Loans for Any Student Act is co-sponsored by Senators Catherine Cortez Masto (D-NV), Brian Schatz (D-HI), Ron Wyden (D-OR), Chris Van Hollen (D-MD), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Ben Cardin (D-MD), and Cory Booker (D-NJ) along with Representatives Jahana Hayes (D-CT-05) and Mary Gay Scanlon (D-PA-05).

Full bill text can be found here.