NORWICH, CT—Today, Congressman Joe Courtney (CT-02) introduced the Zero-Percent Student Loan Refinancing Act. The new legislation would allow Americans with public student loans to refinance their loans to an interest rate of 0% until December 31, 2024. Recently, the Federal Reserve Board and its Chairman Jerome Powell declared that the benchmark interest rate will remain at essentially zero for the balance of 2021, 2022, and well into 2023, a reflection of the continued economic challenges brought on by the COVID-19 pandemic. Rep. Courtney's bill would give public borrowers the same opportunity to take advantage of this low-rate environment that so many borrowers in other sectors of the economy will utilize. Upon introduction of the bill today, Courtney was joined by Representatives Jahana Hayes (CT-05), Eleanor Holmes Norton (DC-At-large), John Larson (CT-01), Joe Morelle (NY-25), Ed Perlmutter (CO-07), Chellie Pingree (ME-01), Albio Sires (NJ-08), Marilyn Strickland (WA-10), and Frederica Wilson (FL-24) as original co-sponsors.
"Today's jobs numbers should be a wake-up call to a lot of armchair economic experts that even though our recovery is moving forward, we've still got big challenges to overcome, and people still need support," said Congressman Courtney. "That's why President Biden signed the American Rescue Plan into law, and it's why the Federal Reserve has extended its zero-percent benchmark interest rate atmosphere well into 2023. That zero-percent benchmark will give financial breathing room to thousands of homeowners, small businesses and others, and it absolutely should—they need it. But so do working Americans with publicly held student loans who cannot refinance unless Congress changes the law. Student loan borrowers aren't only young people just entering the economy—they're moms and dads, small business owners, teachers and nurses, many of whom are trapped by law with legacy student loans with sky-high interest rates. They deserve the same opportunity to refinance their debt that so many Americans have right now, and the Zero-Percent Student Loan Refinancing Act would deliver that opportunity for them."
In other sectors of the economy, mortgage holders, businesses, auto loan holders, and others have been able to seek relief from the COVID-19 economic fallout by refinancing their debt to historically low rates. However, unlike other borrowers, Americans with existing student debt haven't been able to access the lowered rates since the beginning of the pandemic. Many older borrowers, including many millennials, who graduated from institutions of higher education ten or more years ago, are locked into rates of nearly 7%. The Zero-Percent Student Loan Refinancing Act would rectify this inequity and give student loan borrowers access to the low-rate environment that Americans in other sectors of the economy are taking advantage of.
Specifically, Rep. Courtney's Zero-Percent Student Loan Refinancing Act would:
- Allow student loan borrowers to refinance their federal loans to 0% – all eligible federal FFEL, Direct, Perkins, and Public Health Service Act student loan borrowers could refinance their high-interest loans down to 0% through December 31, 2024.
- Automatically refinance debt for Direct loan holders.
Rep. Courtney has worked for years to give working Americans a fair deal on student loan debt, and during COVID-19 he led the effort in the House to give student loan borrowers access to the same lowered interest rates that so many others had taken advantage of. In July 2020, Courtney was joined by Senator Elizabeth Warren (D-MA) in introducing the bicameral Bank on Students Coronavirus Emergency Loan Refinancing Act (H.R. 7449) to the previous 116th Congress. Click here to read more.
The Zero-Percent Student Loan Refinancing Act builds on that effort, and would ensure that working Americans with student loan debt are given the same boost from 0% interest rates that so many others are relying on to recover economically.
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FAQs
Income-Driven Repayment (IDR) Forgiveness
Your loan forgiveness timeline and monthly payment amount depend on which IDR plan you're eligible to choose from. The SAVE Plan includes additional forgiveness benefits that will go into effect in February and July 2024.
What is the student loan 0 interest bill? ›
This bill provides for zero-interest rates on certain federal student loans. Specifically, the bill sets the interest rate at 0% for (1) existing loans made under the Federal Family Education Loan Program or the Federal Direct Loan Program, and (2) new loans made under the Federal Direct Loan Program.
What is zero percent student loan refinancing? ›
Courtney's Zero-Percent Student Loan Refinancing Act would: Allow student loan borrowers to refinance their federal loans to 0% – all eligible federal FFEL, Direct, Perkins, and Public Health Service Act student loan borrowers could refinance their high-interest loans down to 0% through December 31, 2024.
Was the student loan forgiveness bill passed? ›
That includes 4.6 million with a $0 monthly payment. Today's announcement brings the total loan forgiveness approved by the Biden-Harris Administration to $167 billion for 4.75 million Americans.
Are student loans wiped after 25 years? ›
Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.
Are student loans forgiven after 20 years? ›
All borrowers on SAVE receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school. The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan.
Why do my student loans say 0 interest today? ›
Payment Pause and 0% Interest. If your loans were eligible, we automatically paused your loan payments and set your interest rate to 0% from March 13, 2020, until Sept. 1, 2023. This payment pause is also known as an administrative forbearance.
What does interest free student loan mean? ›
Subsidized Loans are loans for undergraduate students with financial need, as determined by your cost of attendance minus expected family contribution and other financial aid (such as grants or scholarships). Subsidized Loans do not accrue interest while you are in school at least half-time or during deferment periods.
How to get a zero dollar student loan payment? ›
Borrowers earning less than about $32,800 individually, or less than $67,500 for a family of four, will see $0 monthly bills. Most other borrowers will see their payments cut by at least half, with the most benefit going to those with undergraduate loans only.
What is a 0 percent interest loan? ›
Many zero-interest loans are actually deferred-interest agreements. If you don't repay the balance within the stated time, you may be subject to fees and/or interest charges. A promotional 0% APR offer from a credit card provider is similar. There are other potential ways to borrow money without paying interest.
Today's loan refinance rates are significantly higher, making it more difficult to find substantial enough savings through refinancing to justify the loss of the federal protections, including loan forbearance and the ability to access federal income-driven repayment plans.
What happens if I refinance my student loans? ›
How does student loan refinancing work? Student loan refinancing allows you to gather all or some of your loans into one new loan, often at a lower interest rate that may help you pay less over time or provide you with a longer repayment term that will lower your monthly payment.
Who qualifies for student loan forgiveness in 2024? ›
Borrowers with only undergraduate debt would qualify for forgiveness if they first entered repayment 20 years ago (on or before July 1, 2005), and borrowers with any graduate school debt would qualify if they first entered repayment 25 or more years ago (on or before July 1, 2000).
What is the new student loan law? ›
The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on your federal student loans after 120 payments working full time for federal, state, Tribal, or local government; the military; or a qualifying non-profit. Learn more about PSLF and apply.
How do you know if your student loan was forgiven? ›
If you have applied for forgiveness under a program like the PSLF or Teacher Loan Forgiveness program, your student loan servicer will notify you regarding your loan being forgiven totally, or partially with a remaining balance, depending on the program.
Is the student loan forgiveness going to be approved? ›
Today's announcement brings the total loan forgiveness approved by the Biden-Harris Administration to $168.5 billion for 4.76 million Americans, which includes $69.2 billion for 946,000 borrowers through PSLF. Before President Biden took office, only 7,000 public servants had received debt relief through PSLF.
Why are my student loans in administrative forbearance in June 2024? ›
SAVE administrative forbearance
The Education Department is putting all SAVE borrowers into an administrative forbearance indefinitely, after the 8th U.S. Circuit Court of Appeals blocked the income-driven student loan repayment plan following SAVE lawsuits filed by groups of Republican-led states.
What is the save plan for student loans in July 2024? ›
SAVE benefits available by July 2024 (on hold due to lawsuits) Monthly bills halved. Payments on undergraduate loans will be cut in half, from 10% to 5% of income above 225% of the poverty line. Consolidation penalty lifted.
How will I know if my student loans are forgiven? ›
What is the status of my Public Service Loan Forgiveness (PSLF) application? You can check the status of your Public Service Loan Forgiveness (PSLF) form by logging in to StudentAid.gov with your account username and password and selecting “View All Activity” from your account Dashboard.
