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Congressman Scott Peters Re-Introduces Bill to Lower Student Loan Burden

WASHINGTON, D.C. – Late yesterday, Congressman Scott Peters (CA-52) re-introduced H.R. 1713, the “Student Loan Repayment Assistance Act,” legislation to increase college affordability by helping students pay off outstanding loan debt more quickly.

“Affordable higher education for every American willing to work for it is central to ensuring future generations can achieve the American Dream and our nation’s competitiveness,” Rep. Peters said. “I would not have been able to attend college without student loans and work study programs. We should be making it easier and more affordable for students to go to college, not keeping it financially out of reach for more and more families.”

Rep. Peters continued, “My legislation will help speed up the repayment process so that young people can begin to make investments that grow the economy, such as owning a home, starting a family, and putting something away for retirement.”

The bill is part of Congressman Peters’ ongoing work to reduce the burden of student loans on American families. Last Congress, in addition to introducing the 2014 version of the ‘Student Loan Repayment Assistance Act,’ he introduced the bicameral “Federal Student Loan Refinancing Act” with Rep. Mark Pocan (WI-02) and Senator Kirsten Gillibrand (D-NY). He was also vocal in the successful effort to stop federal student loan interest rates from doubling.

Supporting organizations of H.R. 1713 include the National Education Association (NEA), Association of American Universities (AAU), American Council on Education (ACE), Student Debt Crisis, and uAspire.

Bob Giannino, CEO of uAspire, in support of the legislation said, “Young college graduates today, more than ever before, are saddled with debt that limits their career options and delays their ability to benefit from the economic lift that a degree should provide.  Employers can serve as a key partner in helping recent college graduates pay off their loans faster, thus helping them engage in our economy in more meaningful and productive ways.  We are thrilled at Congressman Peters’ efforts to lead in this arena and are proud to support this bill.” 

Background on the “Student Loan Repayment Assistance Act”

What it does:

  • Creates an above the line deduction for student loan payments made as part of a repayment agreement between an employer and employee

How it works:

  • An employer enters into an agreement with an employee to assist him or her with student loan repayment up to $6,000 per year with a lifetime cap of $50,000 per individual
  • Like a 401K plan, the employee determines how much he or she would like to pay toward their student loans on a monthly basis and the employer determines the rate at which they will assist
  • Employee and employer contributions to student loan repayments are not subject to either income tax or payroll tax
  • The total employer and employee contributions would go directly to the loan holder on a monthly basis

How it affects repayment time:

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In 2013, according to the Institute for College Access & Success, the average student loan debt for borrowers who graduated from public and private nonprofit colleges was $28,400, with an interest rate of 3.86%. Assuming the standard 10 year repayment plan for a Stafford loan, the average annual payment would be $3,462. Using that data, the graph above demonstrates how this bill would decrease the time it takes for a graduate to pay off their student loan burden.