Debt is a sobering reality for many graduating students, but U.S. Sens. Mark Warner (D-Virginia) and Marco Rubio (R-Florida) introduced the Dynamic Repayment Act in Congress last week in an attempt to help college students better pay off the cost of college.
According to 2014 statistics, the average VCU student accumulates more than $32,000 in debt alone. Warner’s legislation would allow borrowers to spend a varying percentage of their salary above the $10,000 exemption rate. For example, a student making $20,000 a year would pay $1,000 a year — 5 percent — well below the current rate, to help prevent defaulting.
“Student debt is now at $1.4 trillion — that’s more than credit card debt or auto loan debt,” Warner said. “When I got out of college and law school I had $15,000 in debt. If I’d had $50,000 I’m not sure I’d be here now.”
Warner said he views the bipartisan legislation as a way for students to pay off their debt more easily while encouraging entrepreneurship; he also noted the more difficult job market and lower pay rates affecting this generation of graduating students.
“If you’re right out of college and you want to go be a Peace Corps volunteer or start a business or travel, it really is hard to do that because even though your income may be very low, they’re still charging you a large amount,” Warner said. “Income-based repayment basically is what (this legislation is) — if you come out of college and you only make a little bit of money, you can’t pay more than 10 percent of your income in student debt.”
Warner and Sen. John Thune (R-South Dakota) have also introduced another bipartisan bill, The Employer Participation in Repayment Act, to help students overcome their debt. The bill would allow employers to contribute a portion of their workers pre-taxed income to student loan debt — an update to the Employer Education Assistance Program, which allows employers to contribute pre-tax income to help employees finish their education.
“What we’re simply trying to do is say if the employer can have an employee continue their education, why not give the employer that same tax advantage if you want to pay down your student debt,” Warner said. “It’s good for the young person because it means getting their debt paid down by their employer — good as well for the employer because it’s a great retention tool to keep people focused on staying at that particular firm.”
With bipartisan support for both bills Warner said he is hopeful they will pass to help stem a very real problem. Both bills were previously introduced in the 114th Congress before being struck down in committee.
Tyler Hammel, Contributing Writer