[Congressional Record Volume 159, Number 112 (Wednesday, July 31, 2013)]
[Senate]
[Page S6104]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              SERVICEMEMBER STUDENT LOAN AFFORDABILITY ACT

  Mr. DURBIN. Mr. President, we've made a lot of progress over the past 
couple weeks helping our Nation's students borrow at reasonable costs 
for their higher education needs. This year alone, students are 
projected to borrow $21 million in federal student loans. Borrowers 
currently carry about $1.1 trillion in student loan debt.
  Several Federal programs help borrowers having trouble keeping up 
with student loan debt. Two programs in particular are designed to 
recognize the sacrifice made by those who serve our country--whether 
it's in the military or through public service.
  The Servicemember Civil Relief Act protects our servicemembers from 
interest rates above 6% on all loans--including student loans taken out 
preservice--while they are on active duty. The Public Service Loan 
Forgiveness program encourages people to become public servants by 
forgiving student loan debt after 10 years of public service--including 
military service. Under this program borrowers must enroll in a 
qualifying repayment plan and make 10 years of payments while working 
in public service before the loan is forgiven.
  To be eligible, borrowers with Perkins or Federal Family Education 
Loans must consolidate their loans into a Direct Consolidation Loan to 
be eligible for the Public Service Loan Forgiveness program. However, 
there's an unintended consequence at play here.
  Once a servicemember consolidates his or her preservice loans to 
qualify for the Loan Forgiveness program, those loans no longer qualify 
for the 6 percent rate cap under the Servicemember Civil Relief Act. 
This is because consolidation or refinancing of old debt is considered 
a new loan under the Servicemember Civil Relief Act.
  Unfortunately, this forces servicemembers to choose between the 6 
percent rate cap now while they are on active duty and enrolling in a 
program that will forgive their loans after 10 years of service and 
steady payments. Furthermore, this quirk in the law prevents 
servicemembers from taking advantage of historically low interest rates 
by refinancing. A lower interest rate could save borrowers thousands of 
dollars over the life of the loan.
  Congress' intent was to help servicemembers burdened with student 
loan debt, and the Servicemember Civil Relief Act and the Public 
Service Loan Forgiveness Programs have done that. But forcing 
servicemembers to give up the rate cap today for a chance to earn loan 
forgiveness in the future is not what Congress intended, and we should 
fix it.
  This week I introduced the Servicemember Student Loan Affordability 
Act. This bill would allow preservice private or Federal student loan 
debt to be consolidated or refinanced while retaining the 6 percent 
rate cap. This tweak to the law would allow servicemembers to 
participate in both beneficial programs. My bill is supported by the:
  Center for Responsible Lending, National Consumer Law Center, 
National Guard Association of the United States, NGAUS, the Retired 
Enlisted Association, TREA, Veterans of Foreign Wars VFW, and Woodstock 
Institute.
  We have made substantial progress for students in recent weeks, and 
more work is ahead as we address the rising student loan debt. This is 
a small change to the law, but it will have a big impact on 
servicemembers with large student loan debt. Congress continues to try 
to address the financial challenges facing our nation's middle class, 
working families, and students. This fix is one of many steps toward 
that effort.
  I urge my colleagues to consider a simple solution to help 
servicemembers, and I hope they will support the Servicemember Student 
Loan Affordability Act.

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