(Washington, D.C.) – Today, Senator Patty Murray (D-WA), the top Democrat on the Senate Health, Education, Labor, and Pensions (HELP) Committee, introduced the In The Red Act, a major reform to address college affordability so students can graduate college without the crushing burden of student debt. In Washington state, the average college graduate owes $24,804, up from $17,415 ten years ago, according to the Institute for College Access and Success. Hundreds of people from Washington state have contacted Senator Murray through a new tool on her website to share their personal stories about college debt.
The In The Red Act will 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 will support holding colleges accountable to ensure students graduate with high-value degrees and credentials. As a fiscally responsible approach to taking on the national student debt crisis, the In The Red Act is fully paid for and would make college more affordable by closing special interest tax loopholes.
“Skyrocketing college costs and overwhelming student debt are holding back far too many students and families in Washington state and across the country,” said Senator Patty Murray. “Senate Democrats have a plan to give them some much-needed relief by allowing borrowers to refinance their student loans, giving students the chance to go to community college tuition free, and making key investments in student financial aid – all paid for by closing egregious tax loopholes that only benefit the biggest corporations and the wealthiest few. This legislation isn’t just important for students, it’s an important piece of our effort to strengthen the workforce we’ll need to compete and lead in the 21st century, and help grow the economy from the middle out, not the top down.”
Senator Murray was joined by Senators Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Barbara Boxer (D-CA), Ben Cardin (D-MD), Bob Casey (D-PA), Richard Durbin (D-IL), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Ed Markey (D-MA), Robert Menendez (D-NJ), Jeff Merkley (D-OR), Barbara Mikulski (D-MD), Gary Peters (D-MI), Jack Reed (D-RI), Harry Reid (D-NV), Brian Schatz (D-HI), Charles Schumer (D-NY), Jeanne Shaheen (D-NH), Debbie Stabenow (D-MI), Tom Udall (D-NM), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR) in introducing the In The Red Act.
The In The Red Act incorporates a number of college affordability measures to put America on the path to debt-free higher education:
Allow 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 Senator Elizabeth 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.
Strengthen Pell Grants to Keep Pace with Rising Costs
The In The Red Act will address the significant loss in value of Pell Grants by permanently adjusting them for inflation, so they keep pace with rising costs. This provision from Senator Mazie Hirono will prevent the purchasing power of Pell Grants from eroding when the current inflationary increases expire in 2017, which would make it significantly more difficult for students and families to afford higher education. The In The Red Act will raise the Pell Grant maximum award by $1,300 by 2026-27 and provide 9.2 million students with larger Pell Grants.
Make 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 Senator 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.
Ensure Colleges Provide Students with High-Quality Degrees
The In The Red Act supports efforts to enhance accountability for institutions of higher education and provide 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.
Close 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 Senators Jack Reed and Richard 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 Senators Richard Durbin and Jack 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.
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