Durbin, Duckworth: Change Needed to Help Servicemembers with Student Loan Assistance Programs

Common sense legislation would help servicemembers manage their student loan debt which averages more than $25,000 per student

[WASHINGTON, D.C.] – With average student loan debt for active-duty servicemembers at more than $25,000, U.S. Senator Dick Durbin (D-IL) and U.S. Representative Tammy Duckworth (D-IL) today introduced a bill that would fix a provision in the Servicemembers Civil Relief Act (SCRA) – created in 1940 – that unintentionally discourages servicemembers from consolidating or refinancing pre-service student loans.  For servicemembers with Perkins or Federal Family Education Loans, consolidation of pre-service loans is required if they want to participate in the Public Service Loan Forgiveness Program.  The forgiveness program rewards borrowers who have made regular payments for ten years while in public service, including military service.   


A provision in the SCRA protects servicemembers from high interest rates by capping interest rates at 6% on loans that they took out before entering active duty military service.  However, if a servicemember consolidates or refinances their student loans that new loan is no longer eligible for this protection, preventing servicemembers from taking advantage of both the Public Service Loan Forgiveness program and the interest rate cap.


The Durbin-Duckworth Servicemember Student Loan Affordability Act would allow pre-service private or federal student loan debt to be consolidated or refinanced, while retaining the 6% rate cap under SCRA.  This enables servicemembers with Federal Family Education Loans or Perkins student loans to enroll in the Public Service Loan Forgiveness program while they are serving and still take advantage of the 6% rate cap under SCRA


“Loan consolidation is a practical, effective way to manage student loan debt,” said Durbin.  “Taking advantage of today’s historically low interest rates is a smart financial decision that could save borrowers thousands of dollars over the life of the loan.  With the Servicemember Civil Relief Act and the Public Service Loan Forgiveness Program, Congress did not intend to force servicemembers to give up the 6% interest rate cap today for a chance to earn loan forgiveness in the future.  The bill I introduced with Representative Duckworth today is a common sense fix that will empower servicemembers to use every available tool to better manage their student loan debt.”


“Our Service men and women are willing to give their lives for this country and it is imperative that we support them when they come home with good paying jobs, an affordable education, and quality healthcare. This legislation would allow Service Members to keep a 6% interest rate on their loans while also being eligible for loan forgiveness in the future. I am proud to work with Senator Durbin on this crucial issue, and introduce this legislation in the House. Together we can make higher education more affordable for our nation’s heroes.”


Today’s legislation is supported by the Center for Responsible Lending, Military Officers Association of America, National Consumer Law Center, National Guard Association of the United States, The Retired Enlisted Association, Veterans of Foreign Wars and Woodstock Institute.