Rubio Unveils Plan to Help Students Repay Loans Without Making the Government Foot the Bill

Marco Rubio
Tasos Katopodis/Getty Images for Kelly Craft

Sen. Marco Rubio (R-Fla.) announced a plan to help reduce the burden of student loans without the government footing the bill for student debt, as some Democrats have suggested.

His new plan — called the Leveraging Opportunities for Americans Now (LOAN) Act — would allow students to pay a flat rate to finance their loan rather than paying an ever-growing interest rate.

America has a student debt problem.

For the 2018 class, the average student loan debt was $29,800, with around 69 percent of students taking out loans to finance their education. In addition to the burden on students, 14 percent of parents took out loans to assist their child’s education, with the average loan being $35,600.

In total, Americans owe $1.56 trillion in student loans, which is half a trillion more than the total U.S. credit card debt, according to Student Loan Hero.

With both students and their parents saddling themselves with debt, there is less money available for students to buy homes, start businesses, and otherwise participate in the economy.

Democrats want to erase the debt. In effect, they would be giving a massive handout to the middle class without addressing the problem of soaring tuition.

Sen. Elizabeth Warren (D-Mass.) vowed to forgive student loans and make college tuition-free if she becomes president in 2020. As IJR previously reported, there are several problems with her plan.

The main problem is one of fairness. No student was forced to go to a school they couldn’t afford in order to get a degree that doesn’t have enough value to easily repay loans. A government takeover of that debt forgives the poor financial decision of those who are expected to make $1 million more over their lifetime than their peers who didn’t pay for a degree.

Besides being a bailout for the college-educated, the plan has no strategy to hold schools accountable for skyrocketing tuition and administrative bloat. Her proposal also incentivizes. students to get degrees that are not necessary to fill the openings in the U.S. economy.

Rubio’s plans simplify repayment and demand transparency from universities.

For the $1.56 trillion of student debt that already exists, Rubio’s LOAN Act would eliminate student loan interest and replace it with a flat financing rate that students repay. This would protect students from being eaten up by ever-growing interest rates while forcing them to join a payment plan based on their income.

Students would be required to pay 10 percent of their income toward their student loan in order to eliminate the interest and opt for the financing fee. This would keep loans from growing and force students to put a reasonable effort into paying off their loans.

Watch Rubio explain the LOAN Act:

In a statement about the policy, Rubio said:

“For years, our nation’s outdated federal student loan system has saddled working-class Americans with mountains of debt and accruing interest that they are unable to repay. The LOAN Act will ensure borrowers are not trapped in a cycle of debt. Instead of accruing interest, borrowers will pay a one-time financing fee paid out over the life of the federal loan and will be automatically placed in an income-based repayment plan. It’s time that our federal student loan system ensures that those pursuing higher education are able to achieve the American dream without burdening them with debt they can never repay.”

While the plan simplifies repayment, it still holds students accountable for their debt in a way Warren’s plan doesn’t.

Additionally, Rubio reintroduced the Student Right to Know Before You Go Act. This increases transparency from universities about tuition costs and fees so they are aware of the debt they are taking on. Importantly, it also requires universities to release data about the average debt their students have and the average earnings students can expect when they graduate.

This will ensure that students know if they can earn enough to pay back their debt, should they choose to get the degree.

Borrowers could still opt to take a traditional repayment plan, but if Rubio’s bill passed, it would become the standard for students.

As IJR previously reported, President Donald Trump has encouraged the passage of the Right to Know act to ensure transparency. He made it clear he wants the White House to take on universities because he believes families are being “ripped off” while colleges are “making a fortune.”

What do you think?

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Little Marco the problem is that these students who can’t repay their student loans are choosing to go to expensive universities to get a degree for which there is little or no jobs.


Rubio’s plan sounds rational. It is NOT debt forgiveness, a gimme paid for by others.

I especially like the part “Right to Know” part. Students should know what they can expect in terms of debt and the returns on their education investment. It IS an investment of time and $$.


Here’s a problem for the “let 16-yrs old vote” crowd. If they believe that 16 year olds are ready to assume adult responsibilities and choice then why should those in college be free from the results of their choices? INCLUDING DEBTS ACCRUED AS THE RESULT OF THOSE CHOICES.





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