As you know, student loan debt is at record highs nationally and the main talk on capitol hill around solving this issue thus far has been via student loan forgiveness. Regardless of your position on this, it is unlikely to receive enough votes from both parties to pass congress. Although a nice idea, extensive student loan forgiveness would likely lead to more government spending and subsequently more inflation. I propose two alternative solutions that provide a win-win solution to this crisis which would stimulate the economy, limit inflation risk, and reduce student debt burden, all without excess government spending. 

1) Allow all student debt paid off to be tax deductible, not just student loan interest.

The current tax law incentivizes only paying interest on student loans. Under current tax law, if an individual wants to pay off their student debt, they must do so after-tax. Reforming tax law to include student loan payments of any kind as tax-deductible would incentivize debt repayment and also reduce tax-burden, further stimulating the economy. As the tax bracket system is already income-adjusted, this plan largely supports those of lower socioeconomic status, while also incentivizing individuals in all tax brackets. If you do not agree with this proposition, would you at least consider a cap on the amount of debt that can be tax-deductible in a given year (i.e. $10,000/year)? This proposed change could also be applied to individuals who have already paid off their student debt, allowing them to claim these debts paid as tax-deductible on future earnings. This would solve the issue of "what about those who worked hard and paid off their debt already?" Fair for All. 

2) Mandate that Federal Student Loan Interest Rates cannot exceed 3% above the Federal Reserve Interest Rate. 

The Federal Reserve has kept the central bank's interest rate near zero for years. This has allowed institutions to borrow money cheaply. Student loan interest rates these days are often 5.5% or higher, even when loaned by the federal government. This is predatory. Why should students be charged such a high interest rate when your bank likely borrows money from the government for close to 0% interest? If the fed raises rates, fine. At least the rest of the economy would be paying similar interest rates as students are. I do not suggest permanently eliminating student loan interest altogether. However, I believe any individual should not be paying significantly above market rates on their student loans compared to mortgages, car loans, etc. If the federal government were bound by this mandate, private student loan institutions would be forced to adjust their rates to remain competitive. 

I feel that these alternatives reach across the aisle, as it embraces core principles of each political party. I think we can agree that the current 0% interest student loan forbearance during the pandemic cannot last forever. Now is a great opportunity to reform federal student loan policy and tax law before this forbearance must inevitably come to an end. 

I deeply appreciate your service to our community and to our nation and I thank you for hearing what I have to say. If you like these ideas and want to support, I need your help to get more people talking about this! Please sign and share!

Link: https://chng.it/CRHdFsd4WT

Sincerely,

Garrett Jefferies