U.S. Rep. Eric Swalwell (D-Dublin) took aim at improving the debt situation for Americans working to repay federal student loans with two new bills he introduced with colleagues in Congress last week.
One bill would allow federal student-loan borrowers working in public service positions to receive new loan deferment and forgiveness opportunities, while the other would require the federal government to alert borrowers about all of their repayment options each year.
Both pieces of proposed legislation were introduced July 14 by Swalwell and fellow members of the Future Forum -- a group founded by Swalwell consisting of 18 young House Democrats to focus on issues most relevant to millennials, such as student loan debt.
The first bill, the "Strengthening Forgiveness for Public Servants Act," is companion legislation to Senate Bill 2463, introduced in January by two Democratic senators aiming to enhance the Public Service Loan Forgiveness Program and encourage recent college graduates to work in public service.
The federal program offers student loan forgiveness to teachers, police officers, public health workers and other public servants, allowing those qualified borrowers who make full, scheduled monthly payments for 10 years while employed full-time in eligible public service positions to have their remaining Federal Direct Loan balance canceled.
The new bill strives to expand the program by offering additional options to working public servants.
The proposal would allow eligible public employees with outstanding Federal Direct Loan debt to apply to have their student loans deferred while they work in public service as well as have a percentage of their federal loan debt canceled for every two years of service up to a decade.
"The PSLFP takes too long to help most young people with student debt," Swalwell, whose district includes San Ramon, said in a statement. "This bill does more to encourage graduates to serve their communities while helping to relieve the burden of student debt along the way."
Specifically, the proposal would allow 15% of the borrowers' Federal Direct Loan balance to be canceled after working two years in public service, another 15% after four years, 20% after six years, 20% after eight years and finally 30% after 10 years of employment.
The second bill introduced by Swalwell and others last week was the "Know Your Repayment Options Act."
Referred to as House Resolution 5898, the proposed legislation would require the U.S. Department of Education to inform every federal student loan borrower annually about all of their repayment options.
"Student loan borrowers who know all of their repayment options can choose the one that best suits them," Swalwell said.
"And choosing the best plan means they are more likely to avoid defaulting on those loans or getting into other financial trouble," he added. "With more than 42 million past and present U.S. students now carrying more than $1.3 trillion in student loan debt, giving them annual reminders of how best to repay their debt seems like the least we can do."
The bill would require the yearly update to tell borrowers about their average anticipated monthly payment amount, yearly payment amount, lifetime payment amount, number of months remaining to pay off loans and amount that would be forgiven under all possible repayment plans, Swalwell noted.
The report would also give borrowers instructions on how to switch repayment plans if they want.