Today, Higher Education and Workforce Investment Subcommittee Chair Frederica Wilson (FL-24) introduced the Lowering Obstacles to Achievement Now (LOAN) Act to lower the cost of college for current and future student borrowers and their families. The new legislation builds on President Biden's historic one-time student loan debt relief announcement last month to forgive up to $20,000 in outstanding federal student loan debt for millions of borrowers. While the President's actions will provide urgent relief for millions of Americans who currently hold student loans, Congress' work to support students cannot end until we address the root causes of the student debt crisis, including the declining value of the Pell Grant and our flawed student loan system.
"Crafted under the skilled leadership of Chairman Bobby Scott and Subcommittee Chair Frederica Wilson, the LOAN Act will rein in the soaring cost of college and ensure the gates of higher education remain open to everyone -- not just the wealthy few," Speaker Nancy Pelosi said. "Building on President Biden's historic student debt relief, this legislation will help widen the path to prosperity: giving graduates more room to breathe and empowering future students to pursue their dreams. As we continue our fight to put People Over Politics, House Democrats will never relent in ensuring that every American can thrive in the 21st Century."
"For too many, the American dream is becoming more and more difficult to achieve -- and a big reason is the life-long burdens of their student debt. We cannot expect young people to start their lives when they are saddled with debt that only seems to get larger and larger, let alone afford buy a home and send their children to college. President Biden's action to cancel up to $20,000 in student debt is an important first step -- delivering relief to millions of working-class Americans, but we also need to take greater action for the future," stated Chairwoman Wilson. "The introduction of the LOAN Act brings together some of the most forward-thinking and innovative proposals into one comprehensive proposal so that this generation is the last to experience America's student loan debt crisis. Only when we remove this weight from the backs of our most promising young Americans will we be able to realize their full economic and overall potential."
"The LOAN Act is the next step we must take to confront the student debt crisis. Building off President Biden's actions, this legislation would lower the cost of college for students and families by doubling the Pell Grant, improving the Public Service Loan Forgiveness program, and making other critical reforms to streamline our student loan system," said Chairman Scott. "Simply put, by making loans cheaper to take out and easier to pay off, the LOAN Act will help improve the lives of student loan borrowers--both now and in the future."
Student loans often follow borrowers long after college and can prevent them from planning for important life events like buying a house or having a child. The burden falls particularly hard on women and people of color, who take on disproportionally larger amounts of debt and are less likely to be able to pay off the debt throughout the course of their careers.
The LOAN Act would lower the cost of college for current and future student borrowers and their families. The legislation:
Doubles the Federal Pell Grant by increasing the max award over 5 years to $13,000, building on the $1,775 increase to the maximum award as proposed in President Biden's budget;
Improves the Public Service Loan Forgiveness program by shortening the time to forgiveness and broadly codifying the current PSLF waiver;
Makes loans less expensive by expanding access to subsidized loans, limiting capitalization of interest including after forbearance and deferment, and creating a safety net for vulnerable borrowers; and
Lowers interest rates by tying interest rates for all new Federal student loans to the 10-year Treasury note but ensuring that no new loan will have an interest rate higher than 5 percent and allowing both federal and private borrowers to take advantage of these lower rates.