Congressman: These ideas provide a blueprint to get college students, graduates, and parents the help they need
Washington, D.C. – Rep. Bruce Braley (IA-01) today announced that this week he will roll out his College Affordability Plan—a plan constructed after a recent tour of colleges and universities throughout the state of Iowa, and after gathering hundreds of comments from Iowans about their experience attaining and repaying federal student loans.
“Having recently visited Iowa college campuses and reading comments from Iowans sharing their student loan stories, it’s clear Iowans are struggling with rising tuition costs and high student loan debt—my College Affordability Plan would provide a helping hand to those Iowans,” Braley said. “Education is the key to economic opportunity in Iowa and across the country—and we owe it to current and future students to make a higher education more attainable.”
Braley’s College Affordability Plan contains four central components, several of which will be proposed in legislation throughout the week:
1) Strengthen American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) provides college students relief from the high cost of tuition. The AOTC is a $2,500 tax credit that can be taken to offset the cost of tuition, fees, and course materials for undergraduate students at two and four year colleges and universities. However, the AOTC is set to expire at the end of 2017. Braley’s College Affordability Plan would:
· Make the AOTC permanent and increase the credit from $2,500 to $3,000
· Index AOTC to inflation to ensure that the credit increases as tuition rises
2) Double Student Loan Interest Deduction
This important deduction allows student loan borrowers to deduct up to $2,500 on interest paid on their student loans. This is critically important to Iowans, whose graduates have the 6th highest student loan debt of any state. Braley’s College Affordability Plan would:
· Double the deduction from $2,500 to $5,000
· Index the deduction to inflation ensuring that it will increase as tuition rises
3) Help Current Students Who are in Danger of Dropping Out Due to Financial Difficulties
Many students begin their college career on sound financial footing but are then unable to finish their degree because of worsening or unexpected financial problems. Many of these students drop out—even in their final year of school—leaving them with high debt and no degree. Braley’s College Affordability Plan would:
· Create a program providing tuition retention grants to college students near graduation who are in danger of dropping out of school due to financial reasons
o These small grant awards would be given to cover the tuition a student is unable to pay, or supplement other financial aid to help the student stay in school
o Students receiving the grant awards must be identified as being in good academic standing, and in danger of dropping out because they can’t pay their tuition
4) Allow Borrowers to Refinance Student Loans
Currently, student loan borrowers are unable to refinance their student loans. Borrowers could save thousands of dollars if they were given the opportunity to refinance their loans. Braley’s College Affordability Plan would:
· Include the Bank on Students Emergency Loan Refinancing Act, allowing individuals to refinance their student loan debt at lower interest rates, helping address the record high levels of loan debt and delinquencies by giving borrowers the ability to refinance their existing loans to the lower current interest rate of 3.86%.
· The U.S. Department of Education estimates this legislation would benefit 311,000 Iowa student borrowers.
Braley recently called on Iowans to share their stories receiving and repaying student loans, receiving hundreds of responses from across the state. In addition to the above proposals, Braley will share those responses with the Department of Education this week.
Student loan debt today totals $1.2 trillion, $864 billion of which is backed by the federal government. More than 70 percent of students who graduated from college in 2012 had student loan debt.
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