Top 6 Things Congress Could Change to Help Struggling Student Loan Borrowers

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On a national level, a debate rages over whether the country’s growing student loan debt will be the next bubble to devastate our economy.

But if you’re one of the more than 44 million Americans with student loans, you’re probably just struggling to make payments and wondering how you’ll ever pay off your five- or six-digit student loan debt.

The good news is that you have options to manage your debt right now. Strategies such as consolidation, income-based repayment, and private refinancing can ease the burden.

But what if our lawmakers got a little more involved? Here are some of the top ways Congress could help struggling student loan borrowers.

1. Pass a federal student loan refinance bill

The federal government is already involved with student loans, thanks to student aid such as the Direct Loan program. Though student loan servicing is contracted out to private companies, the government funds federal student loans.

But for years Sen. Elizabeth Warren, D-Mass., has been trying to get a student loan refinance bill passed in Congress.

Though you can currently consolidate your loans through the federal government, you can only refinance privately. Refinancing your federal loans with a private company means giving up access to programs like Public Service Loan Forgiveness and income-driven repayment.

A federal refinancing program like the one Warren proposed would allow borrowers to refinance student loans at a lower interest rate — without losing the flexible repayment options and forgiveness opportunities that come with federal student debt.

Unfortunately, since her efforts began in 2014, they have been blocked. “Millions of young people are just stuck,” Warren said, according to The Hill. “They can’t buy homes, they can’t buy cars … all because they are struggling under the weight of student loan debt.”

2. Keep federal student loan interest rates low

Another crusade of Warren’s has been to keep student loan interest rates low. In fact, her first piece of legislation, introduced in 2013, was aimed at letting students borrow at the same rate as bankers.

“We shouldn’t be profiting from our students, who are drowning in debt, while giving a great deal to the banks,” said Warren, according to Time. “That’s just wrong.”

Congress sets federal student loan interest rates. Members of Congress could choose to allow students to borrow at much lower rates, similar to the rates the government charges big banks.

However, things are currently moving in the wrong direction. Federal student loan rates will be updated on July 1, 2017. The rate will be 4.45% on Direct Subsidized and Unsubsidized Loans for undergraduates — an increase from the previous rate of 3.76%.

3. Stabilize the Public Service Loan Forgiveness (PSLF) program

This October, the first cohort of borrowers applying for forgiveness under Public Service Loan Forgiveness will become eligible to receive their rewards for working at a nonprofit or public service job.

However, the program’s future could be in trouble. The Department of Education may not honor PSLF certification letters. Plus, the proposed budget from President Trump would eliminate the program for future borrowers.

Brian Meiggs, the founder of Millennial Money Guide, said that, rather than ditching PSLF, Congress should move to shore it up.

“Congress should push to make the program more stable,” he said. “In an era where government programs are always shifting, this program should stay to help student loan borrowers.”

Meiggs went on to point out that there “is a lot of fine print in the PSLF paperwork that essentially translates, to laymen’s terms, ‘if everything goes to plan.’ Congress can help advance this program so that it is less of a gamble for public service employees.”

4. Incentivize employers to provide student loan benefits

Some companies are offering to help pay down student loan debt, much the same way they contribute to retirement plans. Unfortunately, these efforts don’t offer a tax benefit to employers the same way contributions to an employee’s 401(k) does.

“The fact that healthcare benefits and 401(k) plans are now widely offered by employers is a direct result of Congress passing legislation to encourage and incentivize those benefits through the tax code,” said Tim DeMello, the founder and CEO of Gradifi, a company that helps employers pay down its workers’ student loans.

Employers could use a nudge from Congress to make this benefit more widely available. “If Congress were to enact legislation to allow employees to receive tax-exempt contributions from employers, we would hope to see the number of employees getting student loan repayment assistance grow considerably,” said DeMello.

DeMello claimed that student loans impact seven out of 10 people graduating from college. With the financial stress of student loans weighing on borrowers, workers are less productive, according to PricewaterhouseCoopers.

“It’s a real source of stress for employees entering the workforce,” DeMello continued. “Employers can help reduce the total cost and time to repayment.”

5. Require student loan servicers to provide better information

The Department of Education, led by Secretary Betsy DeVos, recently rolled back memos from the Obama Administration instructing federal loan servicers to work on behalf of students.

Even though servicers are supposed to share information about income-driven repayment and other programs with borrowers, many of them don’t.

A report from the Government Accountability Office indicated that the Department of Education doesn’t adequately prepare borrowers. On top of that, the Consumer Financial Protection Bureau (CFPB) reported that many borrowers aren’t enrolled in affordable repayment plans after defaulting on loans.

“It’s ridiculous,” said Jay Fleischman, a lawyer specializing in student loans. “Our government should be taking steps to help its citizens and protecting them from servicers. Instead, the focus seems to be on profits for the industry.”

If the Department of Education won’t act to hold student loan servicers accountable, Congress could pass laws requiring servicers to act in borrowers’ best interests. Congress could also move away from efforts to reduce the impact of the CFPB and instead provide the resources to allow the Bureau to enforce better practices.

6. Get rid of taxes on student loan debt forgiveness

Currently, if you are enrolled in an income-driven repayment plan, any loan balance remaining after 20 or 25 years is forgiven. The catch? You have to report that amount as income on your taxes.

Steven D. Snyder is a writer, actor, and comedian. He has two Master’s degrees and struggles with his student loan payments.

“Congress needs to get rid of the tax on student loan forgiveness,” Snyder said. “You’ve been paying for 20 or 25 years. You’ve paid interest and everything, and now when it’s forgiven it counts as income. If you have tens of thousands of debt remaining, that can be a devastating tax bill.”

There is already precedent for tax-free student loan forgiveness: PSLF won’t tax borrowers for forgiven loans. Congress could amend the current guidelines to give borrowers who earn loan forgiveness through other federal programs the same benefit.

What can you do to advance a student loan bill?

One of the most important things to remember is that Congress is supposed to represent us. If there is a piece of legislation you’re interested in or if you think your representative should introduce legislation to help student loan borrowers, contact them.

Not sure where to start? Enter your address and state into GovTrack.us and see exactly who your representatives are, what their contact information is, and how they’ve voted in the past. If you disagree with their voting record on student loan issues, be vocal and let them know about it.

You can also get involved at the state level. Many states are taking student loan relief into their own hands — just look at New York’s introduction of free college tuition. Lobby for such programs in your own state; your state’s legislature should have a website where you can look up your representatives.

Lastly, talk to your friends and neighbors about the national student loan burden and organize letter-writing or calling campaigns to let your representatives know what’s important to you. Whether you support a student loan refinance bill, an end to taxation on debt forgiveness, an expansion of PSLF, or any other policy you think would positively benefit a large number of Americans, speak up now to begin enacting change.

Want to learn more about student loan legislation that’s in the works? Check out our student loan bill tracker to see what’s on the horizon.

Interested in refinancing student loans?

Here are the top 9 lenders of 2021!
LenderVariable APREligible Degrees 
1.88% – 6.15%1Undergrad
& Graduate

Visit Splash

1.88% – 5.64%2Undergrad
& Graduate

Visit Earnest

2.50% – 6.85%3Undergrad
& Graduate

Visit CommonBond

1.89% – 5.90%4Undergrad
& Graduate

Visit Laurel Road

2.25% – 6.39%5Undergrad
& Graduate

Visit SoFi

1.88% – 5.64%6Undergrad
& Graduate

Visit NaviRefi

1.90% – 5.25%7Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

2.13% – 5.25%8Undergrad
& Graduate

Visit PenFed

Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.


2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.

Auto Pay Discount Disclosure

You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

Student Loan Refinancing Loan Cost Examples

These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.

One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.

© 2021 Earnest LLC. All rights reserved.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of April 29, 2021. Information and rates are subject to change without notice.
 


5 Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.


6 Important Disclosures for Navient.

Navient Disclosures

1. NaviRefi loans are made by Earnest Operations LLC, a member of the Navient family of companies, subject to individual approval and underwriting criteria. California residents only: Loans made or arranged pursuant to a California Finance Lenders Law license. Additional terms and conditions apply.

– To qualify, you must be a U.S. citizen or non-citizen permanent resident of the United States, reside in a state we lend in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.navirefi.com/help-and-questions. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Loan terms are subject to eligibility. Approval and interest rate depend on the review of a complete application. Loan approval is subject to confirmation that your debt-to-income, free cash flow, credit history and application information meet the minimum requirements. You must have a minimum FICO score to be considered.

– You can choose between fixed and variable rates. Fixed interest rates are 2.75% – 6.04% APR (2.50% – 5.79% APR with Auto Pay discount). Starting variable interest rates are 2.13% – 5.89% APR (1.88% – 5.64% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.

– You can take advantage of the 0.25% Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. NaviRefi rate ranges are current as of June 1, 2021 and are subject to change based on market conditions and borrower eligibility.

– The information provided on this page is updated as of 06/1/2021. Earnest Operations LLC reserves the right to modify or discontinue (in whole or in part) this loan program and its associated services and benefits at any time without notice. Check www.navirefi.com for the most up-to-date information. Terms and Conditions apply. Call 855-284-4893 for more information on our student loan refinance product.

– Earnest Operations LLC – NMLS #1204917, CA CFL #6054788 – 535 Mission St., Suite 1663, San Francisco, CA 94105.
Navient Solutions, LLC – NMLS #212430 – 123 Justison St., Wilmington, DE 19801. Visit https://navirefi.com/lending-licenses for a full list of licensed states.


7 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.


8 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.