Reps. Sara Jacobs, Dan Goldman Introduce Bill Package to Reduce Student Loan Debt Burden
Reps. Sara Jacobs (CA-51) and Dan Goldman (NY-10) today introduced a package of legislation to help combat the unaffordability crisis facing American higher education. The GRADUATE Act enacts a long overdue expansion of the Student Loan Interest Deduction for the first time since 2001, raising the deduction to $10,000 for qualifying borrowers and covering payments of the student loan principal for the first time. The Codifying SAVE Plan Act enshrines the Biden Administration’s historic student loan repayment plan into federal law, protecting the critical regulation from rollbacks by future presidential administrations. Both bills are cosponsored by Representatives Eleanor Holmes Norton (DC-AL), Betty McCollum (MN-04), Jasmine Crockett (TX-30), and Ro Khanna (CA-17).
Congresswoman Sara Jacobs said, “Our country’s student debt crisis has forced millions of people – especially Millennials – to delay or deny many of life’s biggest milestones like buying a home, having kids, or starting a business. We need to do more to bring down the costs of education and eliminate barriers that prevent equal access to quality higher education – including addressing the crushing student debt crisis. That’s why I’m proud to co-lead the GRADUATE Act and the Codifying SAVE Plan Act, which would increase the tax deduction for student loan payments and make permanent the most affordable income-driven repayment plan ever.”
“Higher education remains a vital driver of economic mobility, and we must make it affordable so that every student can access the American Dream,” Congressman Dan Goldman said. “The average New York State borrower holds over $32,000 in student loan debt upon graduation, and that obscene total keeps higher education out of reach for many prospective students, especially those coming from underrepresented and underserved communities. We cannot allow college to remain attainable solely for the wealthiest among us, and we must ensure that New Yorkers, and students everywhere, have access to the benefits and possibilities provided by higher education.”
The GRADUATE Act:
Would allow student loan borrowers to deduct their student loan payments (including accrued interest) from their taxable income. The amount they can deduct will depend on their gross taxable income level:
- Borrowers earning up to $125,000 a year would be able to deduct their student loan payments (both payments to principal and accrued interest) up to $10,000.
- The deduction phases out between incomes of $125,001 per year and $150,000 per year.
- For every child or dependent, borrowers can deduct an additional $500.
- Like the current student loan interest deduction, payments for both public and private loans would be eligible.
The GRADUATE Act is supported by the National Education Association (NEA) and the American Federation of Teachers.
The Codifying SAVE Plan Act:
- This bill would codify the Biden Administration’s new income-driven repayment plan, the SAVE Plan, into law, protecting this new policy from future presidential administrations.
- The SAVE Plan cuts undergraduate borrowers’ monthly payments from 10 percent of their monthly income to 5 percent, and monthly payments would be $0 for those earning under 225 percent of the poverty line.
- The SAVE Plan also ensures that the Department of Education does not charge any monthly interest not covered by a borrower’s payment while they are on the SAVE plan.
The Codifying SAVE Plan Act is supported by The Institute for College Access & Success, the National Education Association (NEA), The Education Trust, the Young Invincibles, the American Federation of Teachers, and the National Urban League.
AFT President Randi Weingarten said, “For decades, Americans have been told that a college education is the pathway to the American dream, but chronic disinvestment and predatory loan servicers have turned it into a debt-riddled nightmare. Fortunately, Reps. Dan Goldman and Sara Jacobs are stepping up to expand and codify the Biden administration’s bold moves to make life a little easier for Americans who just want to go to college. The GRADUATE Act would quadruple the student loan interest deduction, giving borrowers sorely needed relief, and the Codifying SAVE Plan Act would make sure President Biden’s game-changing income-driven repayment plan is around for the long term. These bills have the AFT’s full support. They would create the most affordable repayment options ever and mean a college degree is more accessible, affordable and achievable—not a liability that makes life harder.”
Satra D. Taylor, Director of Higher Education and Workforce Policy and Advocacy at Young Invincibles said, “The SAVE plan is a step in the right direction to alleviating the burdens of the current student debt crisis by creating historically low payments while preventing a growing balance from unpaid interest. It is imperative to codify the SAVE plan language to reduce the stress of student debt for young people. Young Invincibles is dedicated to advancing economic opportunity for young Americans. While we continue to advocate for the swift cancellation of student debt, codifying the SAVE Plan can provide much-needed financial stability to ease the burden of repayment for young people.”
Marc H. Morial, President and CEO of the National Urban League said, “The SAVE Plan is the most affordable income-driven repayment plan for student loan borrowers. Black students are forced to borrow more often and at higher amounts than white counterparts due to the financial impact of systemic racism and the racial wealth gap. Access to affordable repayment plans like the SAVE plan is paramount to economic security and power for Black borrowers and communities. The National Urban League commends Representatives Goldman and Jacobs for their work to ensure the continuation of this vital plan.”
Michele Shepard, Senior Director of College Affordability at the Institute for College Access & Success (TICAS) said, “We strongly support legislation to codify the SAVE Plan. The SAVE Plan provides meaningful financial relief to millions of student loan borrowers and helps shield students from debt that has not paid off.”
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