#InTheRed, Reducing Educational Debt Act Proposed by Democratic Senators
Posted By Eliana Osborn on February 2, 2016 at 2:57 pm
Democratic Senators released a multi-pronged plan for moving higher education affordability forward for 2016. The Reducing Educational Debt Act ties together ideas from Senator Elizabeth Warren (Massachusetts), Mazie Hirono (Hawaii), and Tammy Baldwin (Wisconsin) that haven’t found traction separately.
#InTheRed is the full legislative package moving forward, “seeking to put the country on the path toward debt-free college.” Instead of some of the more dramatic ideas for free college, RED combines incremental changes with the more attention-getting proposals.
Two years of community college tuition-free
A federal-state partnership would fund waivers for community college tuition, saving an average $3,800 per year for up to 9 million students. It would also ensure that degrees would be transferrable so students could continue their education at four-year schools.
According to a press release, “The legislation would also hold colleges accountable by making a condition of the grant that training programs are tied to the skills needed in today’s economy and that credits are transferable to four-year institutions.”
Student loan refinancing at lower interest rates
Refinancing student loans won’t make the debt go away, but it can make debt easier to handle with lower monthly payments: whether from lowering interest rates, lengthening the repayment term, or both.
Senator Warren started talking about this all the way back in 2014. Interest rates change, but once you’ve taken out a loan you are locked in. This bill would allow students to take advantage of better rates when they arise. The original bill, ‘Bank on Students Emergency Loan Refinancing Act,’ was filibustered by Senate Republicans, critical of the minimal impact it would have had.
Now called the Bipartisan Student Loan Certainty Act, private loan holders would be able to refinance at the lower federal loan rate. Participation would be voluntary and only for some qualified borrowers.
Raising Pell Grants to keep up with inflation
Obama administration Pell grant expansions have already included some discussion of increasing Pell amounts to keep them relevant. Pell would be tied to the Consumer Inflation Index, like many government programs, to make sure it rises appropriately. Pell serves low-income students with fewer borrowing options, making it imperative to keep up with costs.
By the 2026-27 school year, Pell would be $1,300 higher than now, according to projections.
Nevada Democrat Senator Harry Reid says that higher education is more out of reach than ever before. “Student loan debt is a tremendous burden on young people, the middle class and our entire economy. Millions of Americans are struggling with the lack of affordable education, and Democrats will continue fighting to ensure their voices are heard in 2016.”
There’s been no specific Republican response to #InTheRed, but moving this legislative agenda forward in a divided Congress will be challenging. At present, there is no consensus on the best way to fix the fiscal crisis in higher education.