Reed Anounces Legislation to Protect Student Loan Borrowers
Mr. President, today, along with Senator Murkowski, we are introducing legislation to provide relief to all federal student loan borrowers during this public health and economic crisis. The bipartisan Student Loan Fairness Act, which is also cosponsored by Senators Murkowski, Jones, and Tillis, will correct an inequity in the CARES Act that left out millions of Federal student loan borrowers from benefits to ease the burden of repayment as we continue to fight COVID–19.
The CARES Act benefits are restricted to borrowers of student loans that are held by the Federal government. This leaves out the borrowers whose Federal Family Education Loans (FFEL) are still held by commercial and State agency lenders, and those with Perkins Loans that are administered by institutions of higher education. In fact, nearly 6 million borrowers were left out under the FFEL Program and another 1.9 million under the Perkins Loan Program. This disparate treatment by loan type is as confusing as it is unfair.
In April, a broad group of more than two dozen organizations representing educators, borrower advocates, veterans, lenders, guaranty agencies, and student loan servicers implored Congress to remedy this inequity. They wrote, ‘‘A Federal loan borrower—regardless of the origination of that loan, be it Part B, D, E, commercial, or government-held—should receive equal, immediate, and critical support in this unprecedented time . . . Already, borrowers are confused as to why their Federal loans are treated differently than others.’’ The Student Loan Fairness Act will extend the CARES Act relief to these borrowers by covering the cost of interest and suspending monthly payments for the period of March 13 through September 30, 2020, and suspending all involuntary collection, such as administrative wage garnishment or offsets from tax refunds, for this period.
This legislation is one component of what should be a comprehensive package of student loan debt relief. As the crisis continues, we should extend the repayment relief until health and economic conditions improve sufficiently for borrowers to be able to begin repayment.
Additionally, we should forgive at least $10,000 of debt for each student loan borrower to help speed the recovery and reduce the drag of the roughly $1.6 trillion in outstanding student loan debt on economic prospects for over 40 million Americans. Going forward, we must reduce the need for student loan borrowing by expanding need-based grants, such as the Pell Grant, and ensuring that states and institutions do their part to lower the cost to students and families.
We should work together to build on the important steps Congress took to provide relief to student loan borrowers in the CARES Act. However, we need to ensure that all Federal student loan borrowers have access to this relief. I hope that my colleagues will join us in cosponsoring the Student Loan Fairness Act and pushing for its inclusion in the next COVID–19 relief package.