Kathleen Rice Introduces Bill To Help Ease Student Loan Debt

Congresswoman Kathleen Rice introduced a bill on Friday that would help ease student loan debt for millions of recent college graduates and their families. The bill would allow those paying back student loans to deduct hundreds of thousands of dollars more in interest.

The bill, the Students and Families Empowerment Act, would effectively remove the $2,500 cap on deductions for student loan interest. Borrowers would be able to deduct all their interest for student loan amounts up to $750,000 – the same loan threshold as mortgage interest deductions. The bill would also eliminate the income limits on student loan interest deductions, allowing individuals earning more than $80,000 annually ($165,000 for couples filing jointly) to take these deductions on their taxes, and end the phase-out for individuals earning more than $65,000 ($135,000 for couples).

Additionally, the bill would extend the grace period from six to 12 months before recent graduates must begin to pay back their loans; this grace period also applies to parent borrowers, who are generally not afforded a grace period. Further, the bill prohibits interest from accruing during this 12-month grace period for most undergraduate, parent and graduate student borrowers. The changes in this bill would apply to federal loans only.

“College graduates are one of our country’s greatest assets,” said Rice. “But instead of building financial security, starting businesses and buying homes, most recent graduates today are leaving college with crippling debt. As Congress prepares to reauthorize the Higher Education Act, we need to prioritize serious reforms to this process. My bill would help ease the burden of student loans by expanding interest deductions and extending the grace period for repayment – so that students actually have a chance to get on their feet and start their careers. These are commonsense changes that would make this process infinitely more manageable for millions of families across our country.”

According to a 2015 study, seven in 10 college seniors who graduated from public and private nonprofit colleges had student loan debt averaging $30,000. In New York State, 72 percent of graduates leave college with an average debt of nearly $30,000.

Today, student loan debt in the United States has skyrocketed to $1.5 trillion. And with one in three parents saying they will assist their children with repayments, student loans are no longer just threatening the financial stability of recent graduates, they are also affecting older Americans who have had to dip into their savings and postpone retirement.

Not only will this bill help alleviate this burden for students and parents, but by increasing the deductions on student loan interest to match those of home mortgages, this bill will also encourage more young Americans to enroll in higher education in the same way that our current tax policy encourages home ownership.

“A college degree remains the most effective way for individuals to improve their career prospects and safeguard their economic futures,” said Mary Beth Labate, president of the Commission on Independent Colleges & Universities. “The repayment incentives in this bill will encourage more students to make that all-important investment in a college degree.”

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