Statement on the Student Loan Interest Elimination Act

Hildreth Institute Applauds Rep. Courtney & Sen. Welch for Leading the Charge to Eliminate Federal Student Loan Interest While Addressing Program Costs

(BOSTON) – The Hildreth Institute released the following statement today in response to the Student Loan Interest Elimination Act:

"The Hildreth Institute commends Rep. Courtney and Sen. Welch for their efforts in crafting legislation that will directly address the student debt crisis. Eliminating federal student loan interest is a crucial step towards providing students and graduates with much-needed relief," said Bahar Akman Imbdoden, Managing Director at the Hildreth Institute.

“What sets this proposal apart from others is its innovative mechanism designed to offset the cost of interest elimination, ultimately leading to significant savings for taxpayers. Under this plan, student loan borrowers' payments on their principal balance would be aggregated in a trust fund and invested strategically to generate revenue. As these investments mature and grow, they would progressively support the costs of administering the federal student loan program. The surplus funds generated would then be utilized to bolster the value of Pell Grants and provide competitive grants aimed at fostering college completion and retention programs at higher education institutions.

“Eliminating interest is not going to end the student loan crisis.” said Bahar Akman Imboden, “But it represents a significant step towards easing the burden and reducing costs for students. By implementing this plan and its cost offset, not only will the student loan financing system gain greater financial stability, but it also holds the potential to generate substantial revenue, thereby assisting a larger number of students in need”.

“As federal policymakers debate how to rein in this crisis, we need to consider innovative solutions that not only eases the burden on current borrowers, but gives future students the ability to get an education without plunging into debt,” said Bob Hildreth, co-founder of the Hildreth Institute.  This is a significant step towards relieving the burden of student debt, as well as a testament to the lawmakers' commitment to fostering a more equitable, prosperous future for students and graduates across the nation.

“With the introduction of the 0% Interest Act, Rep. Courtney and Sen. Welch have demonstrated bold leadership and a deep understanding of the challenges faced by countless individuals burdened by student loans.  According to recent studies, interest payments are taking up a larger portion of student loan payments than ever before – with nearly one-quarter of all payments made in 2019 going to interest. Interest payments alone skyrocketed from $13.1 billion in 2015 to $22.4 billion in 2019. This surge in student loan debt in the United States has reached unprecedented levels, leading to a profound impact on the economic mobility of young professionals and causing a substantial hindrance to overall economic growth.

“The Hildreth Institute applauds Congressman Courtney and Senator Welch for their steadfast commitment to advancing higher education policy, and we remain dedicated to working collaboratively towards a more equitable and sustainable future for all students.

“The Hildreth Institute remains dedicated to returning public higher education to a reliable engine for economic mobility and we are encouraged by the steps taken to address the issue. We look forward to continuing to work together with Rep. Courtney and Sen. Welch as a thought partner in making the system more equitable, affordable, and accessible to all students.”

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To read Hildreth Institute concept paper for the cost offset mechanism, click here

To read a fact sheet on the bill, click here. 

To read a section by section on the bill, click here. 

About the Hildreth Institute
The Hildreth Institute is a research and policy center dedicated to restoring the promise of higher education as an engine of upward mobility for all. We are committed to fixing the broken college financing system by promoting innovative policy solutions at the federal and state levels, in order to invest in higher education while eliminating the burden of student debt. We research, develop, and promote solutions for changes in public policies and institutional financial practices that will reduce costs to students and improve quality. Learn more at hildrethinstitute.org.