Democratic senators propose student loan debt relief
Sen. Vincent Hughes, D-Philadelphia, makes a point as they discuss pension legislation in the Rules Committee ahead of floor debate at the state Capitol in Harrisburg, Pa., Tuesday, June 30, 2015. (AP Photo/Chris Knight)
Three senate Democrats are launching a plan to help people who have student loan debt.
Senator Vincent Hughes of Philadelphia and Montgomery counties, Katie Muth of Montgomery and Chester counties and Lindsey Williams of Allegheny County said they plan to co-sponsor a plan, PA Student Higher Education Lending Protection Act, that allows people to refinance high-interest student loan debt and claim a tax credit on student loans.
Pennsylvanians have more student loan debt per person than any other state, said Hughes, pointing to state data. About 1.8 million Pennsylvanians have student loan debt, with an average debt of $36,000 for graduates, according to state figures from 2017.
Over the past couple decades, private lenders and banks crowded into the student loan market, offering loans with interest rates of 8 percent or higher, which many people are still paying off years later, Hughes said. That’s been a detriment to people, families and the state’s economy.
“Far too much of it is at interest rates that are exorbitant, and quite frankly, they can’t buy a house, they can’t buy a car, they can’t enjoy their own life,” Hughes said.
The HELP Act would bring down rates to 4 percent, something Hughes said would save the average borrower $10,000 or more. It would be funded by as much as $1 billion in bond financing.
The proposal also would also allow people to claim a $500 tax credit on student loan debt. It also includes a plan for employers to contribute to tax-reduced 529 accounts.
Post-secondary institutions would be required to submit student loan information to the state Department of Education, according to a news release. The state banking department would compile information on private lending options, including rates and repayment plans.
“Reform of higher education financing would not be complete without protection for borrowers,” said state Senator Lindsey Williams in the news release. “I struggled to find out the true cost of my higher education, including what I would pay for textbooks, laundry, and transportation. Schools must be completely candid with students about all the expenses they will incur.”
The formal proposal will be introduced in the senate within a week, Hughes said.