RI Congressman's Sweeping College Loan Bill Would Eliminate Interest on Student Debt

U.S. Rep. David N. Cicilline announced Thursday that he will file legislation this fall to dramatically reform the college loan system with the goal of freeing millions of educated Americans saddled with debt.

In a room at the University of Rhode Island's Providence campus, Cicilline said that the act, the Making College More Affordable Act, would make higher education more accessible and affordable "to all who are willing to work hard and not a privilege for the wealthy."

The legislation proposes an option for automatic payroll deductions, which would enable borrowers to repay their loans with pretax income, much like employer-provided health insurance deductions and retirement investment payments taken from each paycheck.

It also would lower the required monthly payment from 10 to 20 percent of a borrower's after-tax income to 4 percent of pre-tax income. Payments would increase in accordance with incomes rising, much like the payment structure under income-based repayment plans offered by the U.S. Department of Education. They could also be spread to 30 years, much like a home mortgage, instead of the 10- to 25-year range for current loans.

Most sweeping is a provision to eliminate interest on student loans entirely. This would eliminate the federal government's practice of "profiting off student loans," Cicilline said. The Congressional Budget Office estimates the government will earn $1.6 billion in interest rate payments just this year.

Cicilline, a Democrat representing the state's first congressional district, estimates that a graduate in Rhode Island carrying the average $35,169 student loan debt will save about $11,754 over the life of the loan.

That's "money that can be put towards opening a business, buying a home, sending your own kids to college, or saving for a secure retirement," the congressman said.

About 43 million Americans are carrying about $1.2 trillion in student loan debt, and for some families, big student loans with hundreds in interest piling up every month pose more looming problems than car and home debt.

The plan also calls for allowing for people with old loans to refinance into the new program.

"There are many issues that divide Republicans and Democrats in Washington, but this shouldn’t be one of them,” Cicilline said in prepared remarks. “Millions of young Americans are being forced to either take on massive amounts of debt or give up on the pursuit of a college degree. This is completely wrong. Higher education must be accessible and affordable to all who are willing to work hard, and not a privilege for the wealthy.”

Photo: A building on the University of Rhode Island campus. (Patch file photo).