Sen. Ryan P. Aument (R-Lancaster County) introduced two bills Tuesday that would provide new options for student loan debt repayment to help ease the impact of student loan debt on current students and graduates.
“The student loan debt crisis cannot be ignored,” Aument said. “Addressing it in a fiscally responsible manner that serves the needs of students, taxpayers, and institutions of higher education alike is absolutely critical if we want to help the next generation experience earned success and upward economic mobility in Pennsylvania.”
Senate Bill 1042 would create the Student Loan Retirement Agreement Program, which would allow borrowers to repay student loans through the use of Income Share Agreements (ISAs).
Under the program, participants would agree to pay a fixed share of their income for a set period to pay off their loans. Applicants must have completed their degree and begun meeting their current student loan obligations to be eligible for the program.
A revolving line of credit using funds already managed by the Pennsylvania Treasurer would provide initial funding for the program. It would be administered by the Pennsylvania Higher Education Assistance Agency (PHEAA).
“Many graduates not only face a large debt load but also high interest rates on the commercial market that make it difficult to pay down the balance of their loans,” Aument said. “Creating this program will give borrowers a more manageable repayment plan that follows the growth of their careers and their earning potential.”
Senate Bill 1043 would establish the Higher Education Income Share Financing Pilot Program. Under the program, current students would enter into a contract with their college or university under which they would agree to pay a fixed percentage of their future income for a set period in exchange for having all or part of the cost of their education paid. PHEAA would administer the program.
“My goal is to address the student loan debt crisis using a multi-faceted approach that cuts costs on the frontend while easing the repayment process for graduates on the backend,” Aument said. “To that end, the program proposed in Senate Bill 1043 may have the effect of driving down the overall cost of education by aligning the interests of the schools to the needs of students, reducing the overall debt burden for students.”
The bills are awaiting referral to committee for consideration.