Reed, Senate Democrats Aim to Reduce Student Debt and Put Country on Path Toward Debt-Free College with 2016 Legislative Package, #InTheRed Campaign
Standing with Advocates & College Students Saddled by Student Loan Debt, Senate Democrats Unveiled A New Legislative Package and Campaign to Address College Affordability in 2016, Dubbed #InTheRed, That Seeks to Put the Country on a Path Toward Debt-Free College
WASHINGTON, DC – Senate Democrats today formally unveiled a new legislative package and campaign, dubbed #InTheRed, aimed at pushing Congress to address college affordability in 2016 and putting America on a path toward debt-free college. The legislative package, which was first announced at a press conference in the U.S. Capitol building with Senate Democrats and dozens of students and advocates, is currently comprised of three Senate bills that would make two years of community college free, address the significant loss in value of Pell Grants by adjusting them for inflation, and allow borrowers to refinance their existing student loans at lower rates. Today’s announcement comes on the heels of the day of President Obama’s final State of the Union address, on which more than two-dozen Senate Democrats brought attention to the #InTheRed campaign by bringing a local student as their guest to the speech, promoting the campaign in local and national media, wearing a “students in the red button, posting photos, videos and graphics to social media, and more.
Senate Democrats also announced today, as part of the #InTheRed college affordability campaign throughout 2016, Senators will be visiting college campuses and meeting with Americans saddled with student loan debt as a way of highlighting the urgency for Congress to act to pass this legislative package and the overall need to put America on a path toward debt-free college. Senators will share the stories they hear on Capitol Hill over the coming months and urge their Republican colleagues to support this legislative package.
Specifically, the legislative package -- the RED (Reducing Educational Debt) Act -- contains three pieces of Senate legislation that seek to:
Make Two Years of Community College Tuition-Free
Under the RED Act, a full-time community college student could save an average of $3,800 in tuition per year, and, if all states participated under this program, an estimated 9 million students throughout the country could benefit. The legislation would also hold colleges accountable by making a condition of the grant that training programs are tied to the skills needed in today’s economy and that credits are transferable to four-year institutions. Specifically, this legislation:
- Creates a new partnership between the federal government and states to help them waive resident tuition in two years of community college programs for eligible students, while promoting key reforms to accelerate student success; and
- Provides a federal match of $3 for every $1 invested by the state to make waive community college tuition and fees for eligible students before other financial aid is applied; and
- Ensures that programs offer academic programs are fully transferable to four-year institutions in their state, or occupational training that leads to credentials in an in-demand industry; and
- Maintains and encourages state funding for higher education; and
- Establishes a new grant program to provide pathways to success at Historically Black Colleges and Universities and Minority Serving Institutions by helping them cover a significant portion of tuition and fees for the first two years of attendance for low-income students.
Allow Borrowers to Refinance Student Loans at Lower Rate
Under the RED Act, student loan borrowers would be given a chance to refinance their debt at the same low rates offered to new borrowers in the student loan program in the 2013-2014 school year. Specifically, this legislation:
- Allows eligible student loan borrowers to refinance their federal loans. All eligible federal FFELP and Direct student loan borrowers could refinance their high-interest loans down to the rates offered to new federal borrowers in the 2013-2014 school year under the Bipartisan Student Loan Certainty Act.
- Allows eligible student loan borrowers to refinance their private loans into the federal program. The bill provides those who meet certain eligibility requirements and are in good standing the option of refinancing their high-interest private student loans down to the rates offered to new federal student loan borrowers this year. Those who refinance will also have access to the benefits and protections of the federal student loan program. Participation is fully voluntary.
Ensure Pell Grants Keep Pace with Rising Costs
The RED Act ensures that Pell Grants keep up with rising costs by indexing the Pell Grant program to the Consumer Price Index (CPI) beyond 2017 with mandatory funding to protect and sustain its value into the future. Without permanent CPI indexing, the purchasing power of the Pell Grant will erode, making it harder for students and families to afford college. Specifically, this legislation:
- Indexes the Pell Grant to inflation, which would increase the maximum Pell Grant aware by $1,300 in the 2026-27 award year, resulting in larger awards for 9.2 million students throughout the country. [White House, 1/19/16]
- Helps millions of students from low-and-moderate-income families pursue higher education, as 73 percent of the 8.2 million Pell Grant recipients in 2015 had a total family income at or below $30,000. [Department of Education, 2/15]
- Helps make higher education more debt free for students of color, as more than 60% of African-American and half of Hispanic undergraduates rely on Pell grants to attend school. [TICAS, 3/13/15]
“Education is the engine that pulls our economy forward, fulfills individual aspirations, and what makes America what it is. We invented public education and led the world in access to higher education for generations. It’s a great irony that we’re falling behind,” said Senator Jack Reed (D-RI). “We must do much more to help our young people afford a college education and provide relief to families currently struggling under the burden of student loan debt. I will continue fighting to enable borrowers to refinance their high interest rate loans at today’s low rates. I am also working with my colleagues on better aligning the incentives in higher education so that all stakeholders, including states and colleges and universities, share more of the responsibility for college affordability and student success. We have a common obligation to ensure that this generation of students has the opportunity to achieve its full potential.”
“Education is the key to the American Dream, but it has never been more expensive or further out of reach for American families. Today, Senate Democrats unveiled our efforts to address the critical issue of student loan debt and outlined our plan to put the United States on a path toward debt-free college, said Senator Harry Reid (D-NV). “Student loan debt is a tremendous burden on young people, the middle class and our entire economy. Millions of Americans are struggling with the lack of affordable education, and Democrats will continue fighting to ensure their voices are heard in 2016.”
“I hear all the time from young people in Illinois struggling to pay off their student loan debts – young people who aren’t able to find work that pays enough to cover their monthly student loan payments with anything left over for them to live on,” said Senator Dick Durbin (D-IL). They feel helpless and trapped. This campaign is about keeping more American students from winding up in the red, and we’re here to give those students a voice. We hope this Republican Congress will listen.”
“Student debt is debilitating, and it’s long past time that we start off on the path towards making college debt free for every student in this country,” said Senator Charles E. Schumer (D-NY). “Senate Democrats are launching our campaign to make sure higher education doesn’t put students in the red, and we will make it our mission to make Congress act.”
“Making college more affordable and reducing the crushing burden of student debt is one of the best ways we can help middle class families and grow the economy from the middle out, not the top down,” said Senator Patty Murray (D-WA), Ranking Member of the Senate HELP Committee. “Far too many students and families in Washington state and across the country are being held back because college is unaffordable and their student loans are unbearable—so we are hoping that Republicans will work with us to pass this bill and take another step toward addressing this critical issue for the middle class.”
“We’re thrilled Senate Democrats have launched their national ‘In The Red’ campaign to build grassroots support for the big, inspiring, popular idea of debt-free college,” said Adam Green, PCCC co-founder. “Requiring students to go into tens of thousands of dollars of debt to obtain a college degree puts education out of reach for millions -- and it hurts people's ability to go into public service, start a small business, or start a family after college.”