Student Loan Interest Revocation Act

Status: Submitted to all 50 U.S. Senators and President Joe Biden — not yet sponsored

Bill Summary

To implement the Student Loan Interest Revocation Act (SLIRA). SLIRA will remove all interest payments and accrued interest on student loan debts. The purpose of SLIRA is to unburden the student borrower from debilitating interest payments while allowing the principal of the debt to be paid back to the American taxpayers.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

Section 1: Short Title

This act may be cited as the "Student Loan Interest Revocation Act (SLIRA)."

Section 2: Purpose

The purpose of this law is to remove the interest payments on student loan debts made with the Federal Government while preserving the principal of the student's debt to be repaid directly to the government. Also, this Bill is intended to fold student loan servicing into the Internal Revenue Service (IRS) and dispose of third-party student loan service providers.

For the benefit of the student borrower, the removal of interest payments will allow the student borrower to maintain current repayment plans, but their payments will directly go towards the principal of their debt devoid of any accrued interest on that debt to the IRS. Furthermore, any interest payments already paid will go directly to reducing the principal of the student borrower's debt. In the instance where a student borrower has paid in interest the total amount of the principal debt obligation, the student's debt is now regarded as paid in full and no further payments are required.

Additional benefits of this law will allow student borrowers to pay off their debts sooner and benefit from the building of credit that can translate into home ownership and participation in the market. Moreover, this law will benefit the current system as it does not change how colleges or student borrowers get access to funds or generally how payments are made. Now, Federal Student Aid, through the IRS, simply disperses payments and collects payments on the principal of a student's debt and applies past interest payments to reduce the principal owed by the student borrower.

This law will not apply to private debt for loans taken out by student borrowers with private loan institutions, banks, or personal loans to the student borrower.

Section 3: Definitions

Student Borrower

A student who borrows money for college through the Federal Government.

Principal Debt

The actual amount of money borrowed for tuition, costs, housing, school supplies, medical insurance (if required by the Educational Institution attended), and other costs naturally associated with a college education.

Accrued Interest

The interest that is incurred on a student's Principal Debt, either while in school or after graduation.

Past Interest Payments

Past interest payments already paid to the account of the student borrower.

Debt Obligation

The total principal of debt owed.

Private Debt

Debt incurred by the student borrower from a private institution or persons for the purpose of paying tuition to attend college or other similar institutions of education.

Section 4: Main Provisions

This act will accomplish the following goals:

1. Unburden the student borrower of student loans with the Federal Government of debilitating interest payments that directly affect their ability to engage financially within the marketplace due to the increased costs of tuition and living expenses of students;
2. Will allow the investment made by American Taxpayers to recover from their investment in an educated society while allowing the student borrower flexibility to meet current costs of living;
3. Leaves intact the current system of borrowing and payments through Federal Student Aid;
4. Addresses the differences in costs of education for Bachelor's Degrees, Master's Degrees, and Doctorate Degrees by reducing the interest payments that adversely affect student borrowers seeking higher degrees which create higher debt obligations;
5. Streamlines payments and collections of debt by folding Student Loan servicing into the IRS instead of outsourcing the service to corporate service providers.

Section 5: Appropriations

There are no additional costs to the federal government as the IRS has expanded its employee base and the current system of borrowing and payments will now be folded into the IRS.

Section 6: Effective Date

This act will be effective immediately upon adoption and apply to all student loan debts with the Federal Government.

Section 7: Summary

As stated above, the intention of this bill, if passed, will address the current student debt crisis while taking into consideration all student debt borrowers' financial burdens. Instead of debt forgiveness, which will be costly to the American taxpayer, this bill will allow a means for the student borrower and the Federal Government to both benefit from the proposed changes to how student loan debt is calculated.

Moreover, this bill can go into effect immediately reducing the principal of most loans that are in repayment, and remove the incurred interest while a student was in school or after graduation which significantly adds to the student's debt obligation. This means that a recalculation of a student borrower's debt obligation that removes all interest incurred while in attendance and after graduation will immediately reduce the student's debt obligation and provide for a means to start to pay down the principal debt the student has borrowed.

Lastly, if passed, this bill will allow student borrowers to benefit from the building of credit by paying off their loans sooner through their current repayment plan options already in place, and will allow the Federal Government to recover on its investment in an educated society.

← Back to Proposed Legislation