Representatives Ramirez, Bonamici, Levin Introduce Legislation to Cap Student Loan Interest Rates for Refinancing Servicemembers

The legislation protects veterans and servicemembers from crippling student debt after pursuing the education they’ve earned

Chicago, IL – Today, Congresswoman Delia C. Ramirez (IL-03), joined by Congresswoman Suzanne Bonamici (OR-01) and Congressman Mike Levin (CA-49), introduced the Servicemember Student Loan Affordability Act to protect veterans and servicemembers from crippling student debt after pursuing the education they’ve earned. The bicameral legislation amends the Servicemembers Civil Relief Act (SCRA) to expand the 6% student loan rate cap benefit for servicemembers who consolidate or refinance their student loans.  

Currently, the SCRA protects servicemembers from high interest rates on school loans by capping them at 6%, which applies to student debt that servicemembers or their spouses incurred before entering the military. However, if a servicemember consolidates or refinances their student loans, which is required for Federal Family Education Loans or Perkins student loan borrowers to benefit from the Public Service Loan Forgiveness (PSLF) program, that new loan is no longer eligible for this interest rate protection.

“Our veterans deserve every benefit they have earned, including a quality education that helps them transition back into their civilian life.  But, like so many students in our nation, student veterans endure predatory student loan interest rates that leave them in debt and struggling to make ends meet,” said Congresswoman Ramirez. “My bill, the Servicemember Student Loan Affordability Act, would protect our servicemembers from high interest rates when they are consolidating or refinancing their loans. As a Member of the Veterans’ Affairs Committee, I will continue to advocate for the cancellation of all student loans and free education for all those who wish to pursue it.”

“We have an obligation to support the Americans who serve our country, and that includes preventing servicemembers from being saddled with unmanageable student loan debt. Currently servicemembers qualify for a six percent cap on interest rates, but they lose that cap when they consolidate or refinance their loans, ” said Congresswoman Bonamici. “The Servicemember Student Loan Affordability Act is a commonsense update that allows servicemembers to retain the cap when they consolidate or refinance. I’m pleased to lead this legislation with Congresswoman Ramirez, and as a senior member of the Education Committee I will continue my work to make college more affordable for all students.”

“Student debt with high interest rates can limit servicemembers’ ability to buy a car or a home and be financially stable. Our bill would help servicemembers tackle student debt by extending interest rate limitations to student loans incurred before entering the military, and therefore cap how fluctuating rates may impact servicemembers’ pocketbooks,” said Congressman Levin. “I’m glad to join Rep. Ramirez on this bill to help servicemembers in their educational and financial responsibilities, and I look forward to it moving through the legislative process.”

This bill is the House companion to S.4645, the Servicemember Student Loan Affordability Act introduced in the Senate by Senators Dick Durbin (IL) and Tammy Duckworth (IL).

The legislation is cosponsored by Rep. Nydia Velázquez (NY-07), Rep. Andrea Salinas (OR-06), Rep. Alma Adams (NC-12), Rep. Danny K. Davis (IL-07), Rep. Barbara Lee (CA-12), and Norton-Holmes (DC-AL).

The bill is endorsed by national organizations like The Tragedy Assistance Program for Survivors (TAPS), Veterans Education Success (VES), The Institute for College Access & Success (TICAS), American Federation of Teachers (AFT), and National Education Association (NEA).

Bill text is available HERE.

BACKGROUND:

According to a report by the U.S. Government Accountability Office, as of 2020, nearly 200,000 active-duty servicemembers held federal student loan debt, and nearly half of those balances were more than $13,000. With an outstanding balance of more than $1.6 trillion, student loan debt has surpassed credit cards as the largest cumulative consumer debt in America, second only to mortgages. Student loan debt falls particularly hard on servicemembers, given the hurdles they must navigate to receive the benefits they are entitled to. 

Congresswoman Delia C. Ramirez is a member of the Committee on Veterans Affairs. She is also a member of the Veteran Affairs Subcommittees on Disability Assistance & Memorial Affairs and Economic Opportunity. As part of her work to ensure student veterans receive access to the education benefits they are entitled, Congresswoman Ramirez introduced and passed out of the House the Student Veteran Benefit Restoration Act, legislation to begin the process of restoring GI Bill education benefits for student veterans who have been defrauded by an educational institution.