WASHINGTON - This week, U.S. Senator Tom Udall joined a coalition of senators to introduce major reform legislation to address college affordability and put America on a path toward debt-free college. The In The Red Act would allow student loan borrowers to refinance outstanding debt at lower rates, increase Pell Grants to keep pace with rising costs, and make a new investment in community college. Additionally, the legislation would help hold colleges accountable to ensure students graduate with high-value degrees and credentials. As a fiscally responsible approach to addressing the national student debt crisis, the In The Red Act is fully paid for by closing special interest tax loopholes.
"College should be a path to a brighter future, but many New Mexico students face mountains of crippling student debt after graduation, and they're struggling to pay back their loans and get ahead," Udall said. "Higher education is more important than ever for students to get the skills they need to succeed in the 21st century economy, and the commonsense measures in the In The Red Act will help more New Mexico students afford college. The student debt crisis is holding back New Mexico families and impacting our economy, and I'll continue working to ensure that college is within reach for all students who want to get a degree."
The bill was led by Sen. Tammy Baldwin (D-Wis.). Other senators joining Baldwin and Udall in introducing it were: Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Barbara Boxer (D-Calif.), Ben Cardin (D-Md.), Bob Casey (D-Pa.), Richard Durbin (D-Ill.), Al Franken (D-Minn.), Kirsten Gillibrand (D-N.Y.), Mazie Hirono (D-Hawaii), Amy Klobuchar (D-Minn.), Patrick Leahy (D-Vt.), Ed Markey (D-Mass.), Robert Menendez (D-N.J.), Jeff Merkley (D-Ore.), Barbara Mikulski (D-Md.), Patty Murray (D-Wash.), Gary Peters (D-Mich.), Jack Reed (D-R.I.), Harry Reid (D-Nev.), Brian Schatz (D-Hawaii), Charles Schumer (D-N.Y.), Jeanne Shaheen (D-N.H.), Debbie Stabenow (D-Mich.), Elizabeth Warren (D-Mass.), Sheldon Whitehouse (D-R.I.), and Ron Wyden (D-Ore.).
The In The Red Act incorporates a number of college affordability measures to put America on the path to debt-free higher education:
Allows Borrowers to Refinance Student Loans at Lower Rates
The In The Red Act will allow student loan borrowers to refinance their outstanding student debt at lower interest rates, saving students and graduates billions of dollars in interest. The In The Red Act incorporates Warren's Bank on Students Emergency Loan Refinancing Act and would allow students to refinance their student loans and take advantage of lower interest rates ' the same way people refinance a mortgage, a car loan or business debt. This reform would give student loan borrowers the ability to refinance their debt at the same low rates offered to new borrowers in the student loan program in the 2013-2014 school year. The U.S. Department of Education estimates that 24.2 million borrowers would save an average of $1,896 if they were able to refinance under the In The Red Act.
Strengthens Pell Grants to Keep Pace with Rising Costs
The In The Red Act will address the significant loss in value of Pell Grants by adjusting them for inflation, so they keep pace with rising costs. This provision from Hirono will prevent the purchasing power of Pell Grants from eroding, which would make it significantly more difficult for students and families to afford higher education. By strengthening Pell Grants, the In The Red Act will provide 9.2 million students with a $1,300 increase to their awards.
Makes a New Investment in Community College
The In The Red Act provides a more affordable opportunity for students to gain the skills they need to succeed. This reform would create a new federal-state partnership to invest in our students, their workforce readiness and the future of our economy by making two years of community college tuition-free. This would help students earn an associate's degree, the first half of a bachelor's degree, or the skills they need to succeed in the workforce without having to take on crippling debt. By incorporating Baldwin's America's College Promise Act, the In The Red Act could save a full-time community college student an average of $3,800 in tuition per year, and if all states participated under this program, an estimated 9 million students throughout the country could benefit.
Ensures Colleges Provide Students with High-Quality Degrees
The In The Red Act supports efforts to enhance accountability for institutions of higher education and provides them with strong incentives to ensure students graduate with high-value degrees and credentials. Additionally, in order to participate in the new partnership supporting community college under the In The Red Act, states must take a number of steps to maintain their commitment to higher education funding, provide high-quality academic and occupational training programs, and adopt institutional reforms and innovative practices that improve outcomes.
Closes Special Interest Loopholes to Make College More Affordable
The In The Red Act puts America on a fiscally responsible path to debt-free college by closing special interest tax loopholes to fully pay for college affordability reforms. The In The Red Act incorporates Reed and Blumenthal's Stop Subsidizing Multimillion Dollar Corporate Bonuses Act to close a major loophole in current corporate tax law by preventing unlimited tax write-offs for performance-based executive pay. Additionally, the In The Red Act would close the carried interest tax loophole for hedge fund managers; enact the "Buffett Rule" to ensure millionaires pay their fair share; close the stock options loophole; and incorporate Durbin and Reed's Stop Corporate Inversions Act to prevent American companies from evading U.S. taxes.
More information on the In The Red Act college affordability reforms is available here.
More information on how the In The Red Act is fully paid for by closing tax loopholes is available here.