AVMA backs bills on student loans, debt

Association hopes to influence Higher Education Act reauthorization
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The AVMA will lobby to save programs that reduce educational debt and provide access to low-cost loans.

The Association also will support legislation that could help veterinarians and veterinary students refinance their educational loans and manage repayment.

In November 2017, the AVMA Board of Directors voted to support seven bills that could help veterinarians and veterinary students maintain access to loans or reduce their educational debt. Another bill supported by the AVMA would help people separate consolidated loans issued to married couples under a Department of Education program that ended in 2006.

Gina Luke, assistant director of the AVMA Governmental Relations Division, expects the AVMA will have opportunities to push its agenda while Congress deliberates reauthorization of the Higher Education Act. At press time, Rep. Virginia Foxx of North Carolina and Sen. Lamar Alexander of Tennessee were expected to introduce reauthorization bills in late 2017 and early 2018.

Reauthorization has been delayed by other legislative priorities since 2013, most recently by the proposed repeal and replacement of the Affordable Care Act and the tax proposals that, at press time, Republicans in Congress hoped to deliver to the president by Christmas. In addition, Luke noted that the federal government was operating under a continuing resolution through Dec. 8, and another continuing resolution could extend spending bill work into early 2018.

The legislation identified by the Board in November for AVMA support joins existing legislative priorities.

Luke said preserving the Public Service Loan Forgiveness Program is the AVMA's top priority in this area. The program forgives the remaining balance of federal Direct Loans to borrowers who make 10 years of payments while working for government agencies or certain tax-exempt organizations, including some with charitable, scientific, or educational missions. The Obama administration proposed capping loan forgiveness, and the Trump administration has proposed eliminating it, she said.

Establishing a refinancing option for student loans is the next most important goal. AVMA leaders think student loan recipients should be able to refinance their debts to take advantage of lower interest rates as homeowners are able to do with mortgages.

Dr. Arce
Dr. José Arce speaks during November's meeting of the AVMA Board of Directors (Photo by R. Scott Nolen

The AVMA also will push for elimination of the origination fees deducted from student loans before disbursement to schools, lower caps on student loan interest rates, and higher caps on the amount students can borrow through federal student loan programs. The AVMA also would oppose any efforts to eliminate income-driven loan repayment plans, a proposal that has some backing on the Hill.

In addition, the AVMA will try to restore a subsidy for Stafford Loans to graduate and professional students, Luke said. The subsidy, which prevents interest accrual while the borrowers remain students, was eliminated by the Budget Control Act of 2011.

In November, the AVMA Board approved supporting the following legislation.

The Educating Student Loan Borrowers Act of 2017, HR 3051, would make federal education loan servicers provide annual disclosures to borrowers, including what repayment plans are available, how to change plans, and what conditions need to be met to forgive or cancel part or all of the loan principal and interest. Background information from the AVMA indicates student loan recipients often fail to take advantage of financial strategies that could help them reduce their debt more quickly, and loan servicers have no obligations to update borrowers on repayment and forgiveness options beyond the required counseling to college students.

The Streamlining Income-driven, Manageable Payments on Loans for Education Act, HR 3554 and S 1712, would make the Department of Education collect information on student loan recipient incomes to determine whether they are eligible for loan discharge, give information on repayment plans to borrowers who are delinquent at least 60 days, and enroll borrowers in income-driven repayment plans if they are delinquent on their loans for 120 days. In a statement and a summary of the legislation, Rep. Suzanne Bonamici of Oregon, who introduced the House version, said the legislation also would reduce paperwork for borrowers, remove paperwork requirements for disabled borrowers whose loans were discharged, and automate the annual process of updating income information while a borrower is enrolled in an income-driven repayment plan.

More than a million people defaulted on student loans in 2016, and more than 8 million are in default, according to information from Bonamici. The legislation would help people access relief already available under federal law.

The Student Loan Borrowers' Bill of Rights Act, HR 3630, would let recipients of student loans use bankruptcy to discharge debts owed to a government or nonprofit institution. It also would create a six-year statute of limitations for filing lawsuits to collect some financial assistance and loans, prohibit collection of debts to the Department of Education through federal tax refunds or wage garnishment, exclude all types of student loan forgiveness from taxable gross income rather than only forgiveness in exchange for work, ensure students can access educational transcripts and credentials regardless of loan defaults, and cancel half the interest and principal balances on eligible federal direct loans issued to borrowers who work in public service for five years while repaying the loan.

U.S. Capitol building

The Student Opportunity Act, HR 3346, would give refinancing opportunities to borrowers under the Federal Family Education Loan Program or Direct Loan Program, prevent taxation of loan forgiveness as income when borrowers use income-based repayment plans, eliminate origination fees assessed when student loans are disbursed, and lower interest rates for federal student loans, according to information from Rep. Al Lawson of Florida, who introduced the legislation.

The Student Loan Relief Act of 2017, HR 3390 and S 1521, would reduce the maximum interest rates for federal direct student loans, eliminate loan origination fees for those loans, and allow refinancing of them and Federal Family Education Loan Program loans.

The Federal Student Loan Refinanc­ing Act, HR 2718 would provide opportunities to refinance loans given since July 2006 through the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, letting borrowers consolidate those loans as Federal Direct Consolidation Loans. Interest rates would be capped at 4 percent, with lower rates applied to borrowers who would consolidate loans that had a lower weighted average interest rate.

The Federal Perkins Loan Program Extension Act of 2017, HR 2482 and S 1808, would provide a two-year reauthorization of a low-interest loan program for college students in need. It expired in September 2017.

And the Joint Consolidation Loan Separation Act, HR 2949 and S 1384, would let borrowers separate consolidated loans that were issued to married couples under a program canceled in 2006.

Related JAVMA content:

AVMA looks to Congress for student debt relief (June 15, 2017)