Congressman David N. Cicilline (RI-01) has introduced H.R. 8457, the Making College More Affordable Act, legislation that will help Rhode Islanders and young people across the country access a college education by addressing the root causes of the student debt crisis.
“Far too many Rhode Islanders and young people across this country are being forced to either take on massive, and often insurmountable, debt or give up their pursuits of a college degree. This is unacceptable – higher education cannot just be a privilege of the wealthy, it must be accessible and affordable to every student looking to continue their education and set themselves up for the career path they choose,” said Congressman Cicilline. “As we continue our work towards total student debt forgiveness, the Making College More Affordable Act will ensure that students have the resources they need and will reform and simplify our broken student loan system while moving us closer to making the pursuit of higher education available to all who want it.”
“We know that attaining a bachelor’s degree is the best way for students to increase their earnings and achieve economic and social mobility, yet many are fearful of the debt they and their families may have to incur for college – and with good reason. The average student debt in Rhode Island is nearly $37,000, the fourth-highest in the country, which means college graduates here have less money to support our local economy, launch their own small businesses or make their dreams of home ownership a reality,” said Andrew Bramson, president and CEO of Onward We Learn, Rhode Island’s largest and most comprehensive nonprofit college access program. “The measures included in Rep. Cicilline’s Making College More Affordable Act – automating payments, reducing required monthly payments, eliminating interest and allowing longer payment periods – will help lower the barriers our students see as deterrents to pursuing higher education and ease the burden on the 200,000 Rhode Islanders and 45 million nationally who have student debt.”
The student debt crisis has left millions of Americans struggling to pay their rent, utilities, groceries or other expenses as they try to climb out from beneath mounting debt. A CNBC survey earlier this year showed that 81% of individuals with student loans have had to delay one or more key life milestones as a result of their debt. Right now, approximately 46 million Americans are working to pay off more than $1.75 trillion in student loan debt, which is approximately $440 billion more than the total debt of U.S. auto loans.
The Making College More Affordable Act will address the root causes of this problem through a five-point approach:
- Creates an automatic payroll deduction, thereby simplifying the payment process by deducting monthly payments in the same way that Social Security contributions are deducted today.
- Lowers the required monthly payment for undergraduate student loans from the current range of 10-20% of a borrower’s after-tax income to a starting contribution of 4% of pre-tax income, with payments increasing for incomes more than $100,000 annually.
- Eliminates interest on student loans.
- Shifts from a range of 10-25 years on a loan to a clearly defined 30-year loan – the same as a home mortgage.
- Allows millions of Americans who are holding student loans today to refinance existing student loan debt by entering into this new system.
Access to higher education is one of the single greatest predictors of success later in life. Among millennials, someone with a college degree, as opposed to a high school diploma, will be paid 63% more in annual income, will be three times more likely to have a job, and will be four times less likely to live in poverty.
Congressman Cicilline’s proposal ensures that more Rhode Islanders, and young people across the country, will have the opportunity to pursue a college education. A Rhode Island college graduate in the Class of 2020 carried, on average, $36,791 in student loan debt. Assuming they paid their loan over 15 years at the federal interest rate, this legislation would save the average graduate more than $11,302 in interest over the course of their loan – money that can be put towards opening a business, buying a home, sending their own kids to college, or saving for a secure retirement.
In addition, by eliminating interest payments for borrowers who repay their loans on time, the Making College More Affordable Act will address the Federal government’s practice of profiting off student loans. According to the Congressional Budget Office, the federal student loan program made around $1.4 billion as a result of interest rate payments in 2021 alone.
Finally, restructuring the payment process will make it easier for borrowers to stay current on their loans. By deducting the required amount from pre-tax income, borrowers will also enjoy a new tax benefit when compared to the current system.
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