Jesse Scheckner
Republican U.S. Rep. Anna Paulina Luna and Democratic U.S. Rep. Jared Moskowitz are teaming up to improve student loan affordability.
The pair just filed legislation to establish a 3% limit on the interest rate of federal student loans.
It’s called the Student Loan Interest Cap Act.
“Millions of students go into high debt every year to be able to afford to go to college. Meanwhile, universities keep raising their tuition costs because they know students will just get a loan with interest rates of up to 9-10% that they will be paying their whole lives,” Luna said in a statement.
“It’s time we put a cap on those interest rates to make it easier for those students to pay their loans responsibly and not be captives to the banks that back these greedy institutions.”
Moskowitz said student loan debt is a “significant barrier for many Americans hoping to start a family, buy a house, and save for retirement.”
“I see interest rates as a simple part of the issue that Congress can tackle,” he said in a statement.
“It’s not right that people are making monthly payments year after year and still owing more than they originally borrowed. As a dad, I want our kids to pursue the education they need to make a difference in the world, not fearing that it will put them in debt forever.”
Student loans in the U.S. today total more than $1.77 trillion. It’s the second-largest type of consumer-generated debt behind mortgages, accounting for 9% of the nation’s consumer debt.
About 92% of all student loan debt is federal. The rest are private loans.
Around 43.6 million Americans hold federal student loan debt, with an average per-borrower balance of $38,000.
Luna and Moskowitz’s bill, filed Friday, follows several similarly aimed bills that failed to gain traction in Congress. Last year, U.S. Sen. Peter Welch of Vermont and U.S. Rep. Joe Courtney of Connecticut filed twin measures that among other things would have capped future interest rates on student loans at 4%. Neither received a hearing.
On Wednesday, the U.S. Supreme Court maintained a temporary pause on an effort by President Joe Biden to erase tens, and possibly hundreds, of billions of dollars in student loan debt. The Court’s decision also left uncertain millions of borrowers enrolled in the federal SAVE program, a Biden administration initiative that ties monthly payments to household size and income.
Last year, the Court rejected an earlier Biden plan that would have forgiven more than $400 billion in student loan debt.
15 comments
rbruce
August 30, 2024 at 3:43 pm
Disagree with this proposal. The problem is not the interest rate or the amount of the loan. The problem is having the taxpayer guaranteeing the loans. Each college endowments should be backing the loans. If the taxpayer is forced to pay defaults, colleges and banks have no incentive to manage the loans.
Day 38
August 30, 2024 at 4:22 pm
Absolutely agree with the above statement. 😀
Hilda
September 4, 2024 at 3:44 pm
I absolutely agree with this
N. Wooten
September 4, 2024 at 4:22 pm
Agree with it concept above. The loans should not be guaranteed by the government or become the burden of tax payers.
If a loan is needed to attend college or any other schooling it should be a commercial loan.
JD
September 4, 2024 at 4:27 pm
Interesting idea, but let’s be real: if college endowments backed loans, only the wealthiest schools could afford to offer them, leaving smaller institutions and students in the dust. The real issue is the skyrocketing cost of tuition that far outpaces inflation, not just who backs the loans. And as for incentives, maybe we should focus on reforming the system that got us here—like tuition transparency and caps on costs—rather than just shifting who’s holding the bag.
Rodney
September 5, 2024 at 9:56 am
Rbruce, you make good common sense that unfortunately Biden / Harris don’t have. Banks were hugely responsible for our 2008 stock crash. Banks whom hold our money don’t know how to manage. The thought of Biden / Harris forgiving the Trillions (not billions) of student loan debt only creates more inflation and destroys what little control we currently have on managing the economy. Bottom line, your absolutely right, the burden falls on the taxpayer.
Taylor
September 4, 2024 at 3:36 pm
Student loans should be forgiven and at the least cap the interest rates on them. It’s impossible for someone to pay back loans when paying the minimum amount each month doesn’t decrease the loan amount because interest. The system is messed up and everything is too expensive for people to afford. Forgive the loans would be the best bet to help debt in America and atleast cap the interest rates.
Lisa
September 4, 2024 at 3:49 pm
When only 13% of the population holds student debt. That leaves 87% of the population without college degrees paying for it. Totally unfair and inflationary.
Evona pawlik
September 4, 2024 at 4:26 pm
My daughter went to eighth year s of college and received her PHD at the University of Florida. She is a clinical pharmacist. Her loan was $130,000. I think people that go into being doctors and pharmacists need help with their loans too. They are very needed in these professions. They need help to.
JD
September 4, 2024 at 4:31 pm
Agreed. Professionals in essential fields like medicine and pharmacy take on huge debt to serve the public. Offering them loan relief isn’t just helping individuals—it’s ensuring we have the skilled workers society relies on. They absolutely deserve support.
JD
September 4, 2024 at 4:29 pm
The 13% holding student debt aren’t the only ones who benefit from education. College graduates contribute significantly to the economy through higher earnings, increased taxes, and job creation. Plus, many of the 87% without debt still benefit from essential services provided by educated professionals—doctors, teachers, engineers. And let’s be clear: the real inflation drivers aren’t student loans but issues like supply chain disruptions and corporate price hikes. It’s about investing in the future, not an “unfair” handout.
P
September 4, 2024 at 4:58 pm
Whenever the federal government gets involved in any facet of business or banking as in college loan lending, costs skyrocket. Leave the private industry alone.
Tom Flynn
September 4, 2024 at 10:05 pm
The bill should deduce interest to zero for those who have shown responsibility by making their payments for at least 5 years. This would add incentive and reward to the process and not cost taxpayers.
JD
September 4, 2024 at 11:07 pm
I like this idea. Any instead of broad forgiveness, how about zeroing out interest for borrowers who’ve made payments for at least five years? Lenders have already earned decent interest by then, and this rewards responsible borrowers without burdening taxpayers. It’s a fair, balanced solution that offers real relief without the downsides of blanket forgiveness.
Homer J Simpson
September 7, 2024 at 1:01 am
I haven’t really read all the posts so please excuse me if this idea has already been mentioned but how about an “interest free” loan for students, kinda like loaning some money to ur mom or dad. Don’t take this the wrong way or anything but the govt taxes us whether we make money, spend money, and when we get old, they start returning all the $ the govt basically stole from every paycheck ever written to us…and tax us again on that. Come on guys, this is crazy. Taxes seem to always go one way…up and the number and quality of public services seems to always shrink. Isn’t that like, the law of diminishing returns or something?
Angie, don’t get me wrong, I completely support all of ur efforts and graciously thank you. Ur quite a fighter and I like that. I pray every day u keep fighting for us. But maybe it’s time to just “cut the kids a break” and make student loans, interest free. Think of it as the govts silent investment in the future of this great nation. That’s not “free” $ as they must pay it back but it think the bankers and all the other folks with the their hands in the cookie jar…to just take a pass here as they r all extremely wealthy and can probably afford to “take one for the team”. Just thinking out loud here…I’m not a loan officer but rather an engineer. So I know how stuff works, not how much stuff gets paid to work…different department.
—Homer
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