Senator Lamar Alexander of Tennessee, the current chairman of the Senate education committee, has recently proposed the Student Loan Repayment and FAFSA Simplification Act, a piece of legislation that would allow students with no income to forgo federal student loan repayments. His recommendations, which he developed with bipartisan support, would also simplify the FAFSA and reduce the number of federal loan repayment options from nine to two.
Under Sen. Alexander’s proposal, students currently making no income (excluding unemployment) would not need to make monthly loan payments. When students do start earning income, their monthly loan payments would be capped at 10% of their discretionary income. And all borrowers would receive student loan forgiveness on undergraduate loans after 20 years (or graduate loans after 25 years) – a period which would include the months borrowers did not need to repay student loans because of a lack of income. Both existing and new student loan borrowers would benefit from this plan. Students would also have the option to choose to pay off their student loan in 10 years. Sen. Alexander compares this option to paying a home mortgage, with consistent principal and interest monthly payments throughout the life of the loan.
As the name suggests, the Student Loan Repayment and FAFSA Simplification Act also tackles the current FAFSA form. The act would reduce the number of questions on the FAFSA from 108 to about 20 to 30 questions total. Sen. Alexander believes that simplifying the FAFSA could help more low-income students attend college and increase the number of Pell grants awarded each year. The fact that many low-income and minority students who would have qualified for Pell grants did not file the FAFSA for the upcoming school year lends believability to his argument.
The Student Loan Repayment and FAFSA Simplification Act comes during a time where all student loan repayments and interest have been frozen by Congress as part of the CARES Act. Those measures are set to expire September 30th, and further student loan relief is not currently planned to be included in a subsequent stimulus package.
What do you think of the Student Loan Repayment and FAFSA Simplification Act? Let us know in the comments. And when looking for student financial aid, make sure to consider all the non-loan options at your disposal. Try a free scholarship search today and discover the grants and scholarships that can help you pay for college – no repayment required!