Several Proposals Aimed at Tackling Student Debt

By: The Associated Press
By: The Associated Press

Washington, D.C.

President Obama and members of Congress have proposed ways to address the issue of rising student loan debt. Some people say the debt is contributing to a widening income gap.

Some of the proposals:

-- The president has proposed extending the "pay-as-you-earn" repayment plan to all student borrowers. The program limits student loan payments based on income but is currently only available to borrowers who took out loans after October 2007.

-- Sen. Elizabeth Warren, D-Mass., has proposed allowing people with high-interest student loans to refinance at today's 3.86 percent rate and would pay for it by raising taxes on the wealthiest Americans.

-- Sen. Marco Rubio, R-Fla., has called for "student investment plans." Private investment firms would cover tuition costs that could be repaid later as a fixed percentage of a graduate's income for a set number of years, regardless of whether that amount covers the total debt. Rubio said that he still owed more than $100,000 in student loans when he became a senator in 2011. His office said he repaid his student loans in December 2012 with proceeds from his autobiography.

-- Sen. Kirsten Gillibrand, D-N.Y., introduced the Federal Student Loan Refinancing Act to allow borrowers who received loans under the Direct Loan or Federal Family Education Loan program after July 1, 2006, to consolidate them into one with an interest rate of 4 percent or less. Instead of paying more than $47,600 over the life of a 20-year, $26,000 loan, the borrower would pay $37,800.

-- Rep. Frederica Wilson, D-Fla., introduced the Student Loan Borrowers' Bill of Rights Act, which would remove educational loans from the list of debts that can't be discharged in bankruptcy.

-- The Student Right to Know Before You Go Act of 2013, with Republican and Democratic sponsors, require colleges to report data to offer students cost-benefit analyses comparing how much they can expect to earn in a particular field with how much they will owe after earning a degree in a given subject.


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