WASHINGTON, D.C. – A South Dakota Senator introduced legislation on Thursday that would provide a new affordable student loan option.
Senator Mike Rounds’ bill is not only an attempt to bring in the private sector into student loans but it’s also a return to old policy.
While at an undergraduate institution, the federal government will be picking up the majority of your loan bill when you get a loan through eligible lenders.
“The federal government will guarantee 98% of that loan to the banks, there’s no risk, the banks are going to buy into this, it used to work really well before it was abandoned in favor of the current plans,” Rounds said.
In a letter sent to Senator Rounds on Tuesday, the America’s Credit Unions and Dakota Credit Union Association endorsed the bill, saying it will allow the industry to effectively meet the needs of their over 140 million credit union members nationwide.
“We have capacity, we have humans here, we have people who would love to sit down with you and process it, we would be very happy to facilitate a member’s questions about that program at any time,” Jeff Jorgensen, President of Bluestone Federal Credit Union said.
Jorgensen says his company still gets phone calls daily asking if they can get a student loan and that they have to send them to the federal government.
The bill allows for up to $19,000 per year in loans adjusted with inflation, the average cost to attend a public university. The interest would not accrue when students are in school.
Additionally, there would be two different repayment options including one that is income-driven. You could either do a 15-year installment plan with no penalties for paying early or do an income-driven repayment plan. It’s available for undergraduates or trade school students.
The hope is to help middle-class students who often have to bypass college to some extent.
According to Rounds, the bill would not take away opportunities for governmental-based student loan programs, although his bill doesn’t require you to fill out the FAFSA form.
