Peter DeFazio, the United States House Representative for Eugene’s district and a University of Oregon alum, has proposed legislation that would change college debt repayment and financial aid. Congressman DeFazio’s bill, the Helping Improve Grants for Higher Education & Repayment of Expensive Debt Act, or more commonly called the Higher Ed Act, was introduced three weeks ago, according to a press release.
If enacted, the bill would raise the minimum salary that students earn before they must begin paying back their student loans on an income-driven repayment plan.
The bill would also reinstate year-round Pell Grant scholarships, offer refinancing to some students and allow student loans to be discharged after filing for bankruptcy.
The bill “is going to help students get out from under the thumb of crippling loan repayment plans,” said Beth Schoenbach, Communications Director for DeFazio.
According to Jim Brooks, UO’s Assistant Vice President for Enrollment Management & Director of Student Aid and Scholarships, the impact of this portion of the bill is limited because not every student repays loans through income-driven plans.
“The other big one in here is the ability to refinance loans, which would benefit students,” Brooks said of the act.
Student loan interest rates change every year. Depending where congress sets them, they can be significantly lower or higher than the previous year. In 2008, undergraduate subsidized loans came with a 6.8 percent interest rate, according to the Oregon Department of Education. The rate for loans disbursed after July 1, 2016 is 3.76 percent, almost three full points below.
The refinancing portion of DeFazio’s act would allow some students paying the higher interest rates to pay at the current rate. Students would pay that lower interest rate for all of their loans together, not just one year.
“I would say that this could impact students more than probably everything else that’s in there because this affects everybody who gets loans,” Brooks said. “Probably 50 to 51 percent of our students borrow.”
“What the Congressman really wants to get at here are the student loans; the stress and kind of booming, constant presence of student loans hold young people back,” Schoenbach said.
She added that the bill’s purpose is to aid students in starting their lives following school and help them get established before they have the pressure of loan repayment.