Wyden, Merkley, Baldwin Introduce Major College Affordability Reform Legislation
Bill would allow refinancing of student loans, strengthen Pell Grants, make a new investment in community college and is paid for by closing special interest tax loopholes
WASHINGTON, D.C. – Oregon’s U.S. Senators Ron Wyden and Jeff Merkley, along with Tammy Baldwin, D-Wis., today introduced the “In The Red” Act, a major reform to address college affordability and put America on a path toward debt-free college.
The In The Red Act will allow student loan borrowers to refinance outstanding debt at lower rates, increase Pell Grants to keep pace with rising costs and make new investments in community colleges. Additionally, the legislation will support holding colleges accountable to ensure students graduate with high-value degrees and credentials. As a fiscally responsible approach to taking on the national student debt crisis, the In The Red Act is fully paid for and would make college more affordable by closing special interest tax loopholes.
“Students and their families need Congress to focus on finding solutions that will make sustained headway in tamping down the rising cost of higher education and to prevent the crushing debt left by increased tuition,” Wyden said. “That’s why I’m proud to join this effort to put a serious dent in college debt and why I’ll continue to work to make sure fewer students find themselves In the Red.”
“Higher education should be a pathway to a better future, not crushing debt. As the first in my family to go to college, I know how daunting the high cost of college can be to students of modest means,” Merkley said. “We need to do much more to make sure that every capable student can afford higher education and that we’re not requiring young Americans to mortgage their future for a credential that is essential for many in today’s economy.”
"Higher education should be a path to prosperity, not a path into suffocating debt. But unfortunately, college costs and student loan debt are holding back an entire generation and creating a drag on economic growth for our country," Baldwin said. “The idea that the next generation will be able to go further and do better than the last one is the heart of the American dream. That is why I will fight for the commonsense solutions offered in the In The Red Act.”
Wyden and Merkley also introduced two bills earlier this year to help make college more affordable for students and families, the PARTNERSHIPS Act and the AFFORD Act.
The Wyden-Merkley PARTNERSHIPS Act would end tuition hikes at public colleges and universities by creating a program that provides federal matching funds for states that agree hold down college tuition growth. Part of the bill was signed into law at the end of last year.
The Merkley-Wyden AFFORD Act would ensure that an income-based repayment option capping payments at 10% of discretionary income is permanently available to all federal borrowers.
Wyden, Merkley and Baldwin were joined by Senators Richard Blumenthal, D-Conn., Cory Booker, D-N.J., Barbara Boxer, D-Calif., Ben Cardin, D-Md., Bob Casey, D-Penn., Richard Durbin, D-Ill., Al Franken, D-Minn., Kirsten Gillibrand, D-N.Y., Mazie Hirono, D-Hawaii, Amy Klobuchar, D-Minn., Patrick Leahy, D-Vt., Ed Markey, D-Mass., Robert Menendez, D-N.J., Barbara Mikulski, D-Md., Patty Murray, D-Wash., Gary Peters, D-Mich., Jack Reed, D-R.I., Harry Reid, D-Nev., Brian Schatz, D-Hawaii, Charles Schumer, D-N.Y., Jeanne Shaheen, D-N.H., Debbie Stabenow, D-Mich., Tom Udall, D-N.M., Elizabeth Warren, D-Mass., and Sheldon Whitehouse, D-R.I., in introducing the In The Red Act.
The In The Red Act incorporates a number of college affordability measures to put America on the path to debt-free higher education:
Allow Borrowers to Refinance Student Loans at Lower Rates
The In The Red Act will allow student loan borrowers to refinance their outstanding student debt at lower interest rates, saving students and graduates billions of dollars in interest. The In The Red Act incorporates Senator Elizabeth Warren’s Bank on Students Emergency Loan Refinancing Act and would allow students to refinance their student loans and take advantage of lower interest rates — the same way people refinance a mortgage, a car loan or business debt. This reform would give student loan borrowers the ability to refinance their debt at the same low rates offered to new borrowers in the student loan program in the 2013-2014 school year. The U.S. Department of Education estimates that 24.2 million borrowers would save an average of $1,896 if they were able to refinance under the In The Red Act. More information on this provision is available here.
Strengthen Pell Grants to Keep Pace with Rising Costs
The In The Red Act will address the significant loss in value of Pell Grants by adjusting them for inflation, so they keep pace with rising costs. This provision from Senator Mazie Hirono will prevent the purchasing power of Pell Grants from eroding, which would make it significantly more difficult for students and families to afford higher education. By strengthening Pell Grants, the In The Red Act will provide 9.2 million students with an increase of $1,300 to their awards. More information on this provision is available here.
Make A New Investment in Community College
The In The Red Act provides a more affordable opportunity for students to gain the skills they need to succeed. This reform would create a new federal-state partnership to invest in our students, their workforce readiness and the future of our economy by making two years of community college tuition-free. This would help students earn an associate’s degree, the first half of a bachelor’s degree, or the skills they need to succeed in the workforce without having to take on crippling debt. By incorporating Senator Baldwin’s America’s College Promise Act, the In The Red Act could save a full-time community college student 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. More information on this provision is available here.
Ensure Colleges Provide Students with High-Quality Degrees
The In The Red Act supports efforts to enhance accountability for institutions of higher education and provide them with strong incentives to ensure students graduate with high-value degrees and credentials. Additionally, in order to participate in the new partnership supporting community college under the In The Red Act, states must take a number of steps to maintain their commitment to higher education funding, provide high-quality academic and occupational training programs, and adopt institutional reforms and innovative practices that improve outcomes. More information on this provision is available here.
Close Special Interest Loopholes to Make College More Affordable
The In The Red Act puts America on a fiscally responsible path to debt-free college by closing special interest tax loopholes to fully pay for college affordability reforms. The In The Red Act incorporates Senators Jack Reed and Richard Blumenthal’s Stop Subsidizing Multimillion Dollar Corporate Bonuses Act to close a major loophole in current corporate tax law by preventing unlimited tax write-offs for performance-based executive pay. Additionally, the In The Red Act would close the carried interest tax loophole for hedge fund managers; enact the “Buffett Rule” to ensure millionaires pay their fair share; close the stock options loophole; and incorporate Senators Richard Durbin and Jack Reed’s Stop Corporate Inversions Act to prevent American companies from evading U.S. taxes. More information on these provisions is available here.
More information on the In The Red Act college affordability reforms is available here.
More information on how the In The Red Act is fully paid for by closing tax loopholes is available here.
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