What is Marco Rubio’s Leveraging Opportunities for Americans Now Act?

Marco Rubio recently proposed some sweeping changes to the way that Federal student loans are handled with his LOAN Act (Leveraging Opportunities for Americans Now), which includes significant reforms to the way that interest is dealt with, as well as other changes that are supposed to reduce the costs of Federal student loans.

Briefly, here are the main tenets of Senator Rubio’s student loan proposal:

    Senator Marco Rubio’s LOAN Act Would

  • Entirely eliminate interest from the Direct Federal Loan Program
  • Introduce a new, one-time fee that would be paid over the life of the loan
  • Streamline Federal Student Loan Repayment Plans, offering a 10 year, fixed repayment plan, or an Income-Driven Repayment Plan that charges 10% of annual earnings

But is Senator Rubio’s proposal a good idea for most borrowers? Or is this just more of the same bad news we’ve seen since President Trump took office? Find out below!



But First…

Before we go through Marco Rubio’s student loan plan, let me offer you once quick piece of advice: even if Senator Rubio’s bill WERE to be passed, it’ll take YEARS before any of the relief he’s proposing actually begins helping you in any substantial way.

Instead of sitting around, waiting for someone’s bill to get passed and fixing your student loan problem, a much better idea is to start tackling it head-on, right now!

If you're truly struggling with student debt, then you should also consider paying a Student Loan Debt Relief Agency for help. Why? Because the people working at these companies deal with student loans all day, every day, and they're your best chance at figuring out how to get your loans back under control.

I've interviewed all sorts of debt relief agencies over the past 10 years, talking to all sorts of so-called "experts", and I can tell you that in all honesty I've only found two companies I trust to offer actual financial relief to people struggling with student loans.

For help with FEDERAL Student Loans: Call the Student Loan Relief Helpline at 1-888-906-3065. They will review your case, evaluate your options for switching repayment plans, consolidating your loans, or pursuing forgiveness benefits, then set you up to get rid of the debt as quickly as possible.

For help with PRIVATE Student Loans: Call McCarthy Law PLC at 1-877-317-0455. They will negotiate with your lender to settle your private loans for much less than you owe (typically about 40% your total outstanding balance), then get you a new loan for the much lower, settled amount so you can pay off the old deb, repair your credit and start making much lower monthly payments. NOTE: McCarthy Law can ONLY help with Private student loans, so please do not call them if you only have Federal loans.

If you do decide to call one of these companies and you have a bad experience with either of them, PLEASE make sure to come back and let me know about it in the Comments!


Is Marco Rubio’s Student Loan Reform Plan a Good One?

Let’s review each of the tenets of Marco Rubio’s proposal one by one to decide whether or not they seem like good ideas, or steps in the wrong direction.

After you’ve reviewed each of the suggestions he’s making to reforming student loan laws, you should have a much better idea about whether or not this Bill will make things better or worse for you.

Just remember that this isn’t the only proposal on the table, and that the competing reform bills from Democratic candidates like Senator Elizabeth Warren and Senator Bernie Sanders are also receiving a great deal of media and political attention.

With that said, let’s review Marco Rubio’s proposed changes to see how they stack up!


Should Interest Be Eliminated from Federal Student Loans?

Yes!

In my humble opinion, the biggest problem with the current student loan system is that it traps unsuspecting borrowers in ever-increasing levels of debt, due to interest, and specifically compound interest.

I don’t think that 18 year old kids understand how interest works, or how quickly their loans can balloon in size once they begin missing monthly payments, falling into Delinquency or Default Status, which tends to lead to a massive inflation of their overall debt loads.

In many cases, the most desperate borrowers who I talk to have gotten there simply because they did not understand how interest worked, and ended up owing far more than they were expecting to owe in the first place.

So in my opinion, eliminating interest sounds like a great idea, even if it’s replaced with a large “one-time fee”, because at least borrowers would then know exactly what they’re going to owe in return for their student loans, rather than having to guess how much interest will accumulate over time.


Is the One-Time Financing Fee a Good Idea?

Yes!

As I mentioned above, replacing the confusing interest accumulation process with a simpler, one-time financing fee sounds like a great idea because it’ll make Federal student loans much more straightforward.

Instead of people worrying about interest, having to use advanced calculators and projections and estimations to determine how much their loans will cost over the lifespan of the repayment process, borrowers can enter into Federal student loan debt knowing exactly what they’ll owe.

And I think this is a fantastic idea because it will reduce the chances that borrowers end up missing payments, accumulating additional interest, fees, financing charges, and falling into inescapable student debt.

Again, most of the people I speak to who are absolutely desperate for help with their loans didn’t get there in a day, but because they failed to understand how quickly interest accumulation would occur, and ended up owing way more than they originally anticipated.


Should We Streamline Federal Student Loan Repayment Plans?

Maybe.

I’m torn on this element of Marco Rubio’s LOAN Act to reform student debt, because I think the current suite of Federal Student Loan Repayment Plans does an excellent job offering all sorts of options for repaying your loans.

Currently, there are several different types of repayment plans, allowing borrowers to choose how they want to tackle their student loans, with the two major differences being that you can opt to make payments based entirely on what you owe, or based on what you owe, plus taking into account the amount of money you’re actually earning.

And I’m personally opposed to “streamlining” because it means offering fewer options to borrowers, and I think the current system does a good job of providing plenty of opportunities to customize your student loan payment approach to your own specific financial needs.

However, I do like the idea that Marco Rubio’s Income-driven plan would set monthly payments at just 10% of discretionary income, because only a couple of the current Income-driven plans offer such low rates, and even those that do include little caveats that can disqualify borrowers from getting the best rate.

With that said, let’s look into this topic in a little more detail to make sure that we fully understand exactly what’s being proposed, and how the changes Senator Rubio has in mind would alter the repayment process.



What are the Current Federal Student Loan Repayment Plans?

As I said earlier, there are several options for repaying Federal student loans, and borrowers are able to pick the one that they like best, which is great for providing financial flexibility.

For the straightforward approach, there’s the Federal Student Loan Standard Repayment Plan, which is extremely straightforward, and which sets payments based on how much you owe, and the assumption that you’ll repay the loan over a period of just 10 years.

And for those borrowers who DO want to take their income levels into account, there’s a whole slew of Income-Driven Federal Student Loan Repayment Plans, which allow you to set monthly student loan payments based on the amount of money you’re actually earning.

The Income-Driven Repayment Plans include plans like the Pay As You Earn Plan (PAYE), the REPAYE Plan, the Income-Based Repayment Plan (IBR), and the Income-Contingent Repayment Plan (ICR).

IDR Repayment plans typically do reduce the cost of monthly payments, which is good in the short term, but they also tend to increase the total amount of money owed over the lifespan of the loan, since the loans have more time to accumulate more interest.

And that’s exactly what makes them a double-edged sword, as borrowers can end up trapped in the situation where they think they’re getting the best deal, but where they end up owing far more in total than they ever imagined would be possible, thanks again to the effects of compound interest.



Where Did Marco Rubio’s Student Loan Plan Come From?

Why is Senator Rubio proposing sweeping changes to student loans, and especially now?

The 2020 Presidential Election Season is in full-swing, and while we’ve been inundated with new student loan reform proposals from Democratic Candidates like Elizabeth Warren, Bernie Sanders, Kamala Harris and other darlings of the left, Marco Rubio’s new student loan reform proposal is one of the first big ideas we’ve seen from the Republican side.

The simple fact is that there’s no better time for Politicians to talk sweeping reforms than during the Presidential Election, because it gives them the best opportunity to garner media attention.

With the spotlight shining brightly on all candidates, contenders, and even the incumbent President, this is a great opportunity for Politicians to start throwing proposals out there and gauging public sentiment and support for their ideas.

And Marco Rubio is no stranger to political angling – the guy nearly secured nomination for President last time around, and maybe would have, had Trump not showed up on the scene and stolen his thunder!

That’s why we’re hearing his opinion on student loans now, at a time that people are starting to tune into politics again, and pay attention to policy details, platforms, and proposals, rather than the shocking things President Trump has tweeted each morning.

For full details on what the candidates are suggesting, make sure to visit my page on the 2020 Presidential Election Candidates Views on Student Loans.


Will Marco Rubio’s Plan Help Resolve the Wider Student Loan Debt Crisis?

It might!

Marco Rubio’s proposal is pretty conservative in that it doesn’t change all that much (especially compared to plans like those of Senator Warren or Senator Sanders), but my opinion is that it makes it more likely to get adopted should it end up being considered, because it isn’t as threatening as the plans proposed by the Democrats.

I should also mention that I’m 100% in support of the sorts of changes Senator Rubio has proposed, because I think that streamlining and simplifying the student loan lending and repayment process would certainly make things simpler and easier for most borrowers to understand, which should help in the long-run.

My personal opinion on the Worsening Student Loan Debt Crisis is that the $1.5 trillion dollar debt bubble will continue to inflate until the entire system is overhauled to simplify it, because people are getting buried in debt by a system that they truly do not understand.


How Does Marco Rubio’s Proposal Compare to Others?

As I mentioned above, Marco Rubio’s Proposal doesn’t offer as many sweeping changes to the Federal student loan system as those proposed by Democratic Senators like Elizabeth Warren or Bernie Sanders Free College Plan, but it is a step in the right direction.

While Rubio’s proposal would certainly help improve things slightly, I do think that Elizabeth Warren’s Student Debt Plan remains the best on offer, since it proposes much larger reforms, including:

    Senator Warren’s Student Loan Debt Plan

  • Eliminating $50,000 in student loan debt for everyone with an annual household income under $100,000
  • Providing debt forgiveness, up to $50,000, for anyone with an annual household income between $100,000 – $250,000
  • Allowing everyone to avoid paying taxes on Federal Student Loan Debt Forgiveness Benefits
  • Making Private Student Loans eligible for Cancellation benefits
  • Streamlining the process for approving Federal Student Relief Benefits, which would make Forgiveness, Discharges and Cancellation benefits much easiest to access

However, one thing to keep in mind is that Marco Rubio’s Proposal is MUCH MORE LIKELY to get adopted, and be passed into law, since Elizabeth Warren’s plan will absolutely run afoul of the powers that be, including powerful lobbies like the Big Banks, the Big Student Loan Servicing Companies, and the Debt Collection Agencies, etc., who all happen to be close friends with our Secretary of Education, Betsy DeVos.

What makes me happy is that student debt reform has taken center stage again, and is receiving national attention for the first time in nearly a decade.

This is the most talk I’ve seen on student loans since President Obama’s Student Loan Forgiveness Plan was initially passed nearly a decade ago, so it’s a promising sign that changes are coming, and that real reform may be possible.

No matter which student loan proposals end up getting adopted, it sounds like we’re headed the right direction, and that leaves me feeling optimistic that the student loan debt crisis might finally start getting better before it gets any worse.



Need Help With Your Student Loans?

If you’re struggling with student debt, then I’ve got good news, because this website was built entirely for people like you!

I’ve spent over a decade developing over 100 different Guides to the student loan process, explaining how to get the best loans, how to pay them off the fastest, and how to eliminate your debt without paying a single penny for it at all!

So for those of you who need help now, please review the sections below, where I link to the most important Guides I’ve created over the years, and where you can find real financial relief for both Federal and Private debt.


For Help With Federal Student Loans

To get Help with Federal Student Loans, you’ll want to visit my Guides on:

Just remember, the Guides above were developed for people with FEDERAL student debt. If you have Private loans, then you’ll need to look elsewhere for assistance.



For Help With Private Student Loans

If you need Help with Private Student Loans, then you should be visiting my Guides on:

Keep in mind that the assistance programs for Private loans are typically much harder to access than those for Federal debt, so you won’t want to hold your breath waiting for benefits, as these are long-shot options.

And if you have any other questions about dealing with your loans, please do feel free to post them in the Comments section below. I review Comments on a regular basis, and will do my best to get you a response within 24 hours.



Finally: Please Help Me Out!

Running this website is no easy task. It’s basically a second job!

And I can only continue to dedicate the amount of time and energy required to keep it up to date if more people like you visit it.

If this site helped you with your loans, then please make sure to do your part to help me out in return – post a link to the site to Reddit, Facebook, Twitter, or wherever it is that you talk to people online.

The more people who visit FSLD, the more time I can spend to developing Guides like this, for people like you!

Thanks for visiting, and thank you so much for your support!


Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.

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Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt in 2011, where he offers advice, tips and tricks for paying off student loans as quickly and affordably as possible.