Merkley: Old student loan models ‘aren’t working anymore’

His bill, the “Pay It Forward” Guaranteed College Affordability Act, would replace federal loans with up-front payment of college costs in exchange for repayment based on the graduate’s income.

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Merkley’s announcement came after President Obama signed a student loan bill into law Friday. The Bipartisan Student Loan Certainty Act, S. 1334, sets interest rates on undergraduate student loans to the 10-year Treasury note plus 2.05 percent with a cap of 8.25 percent.

Some liberal Democrats opposed the bill and argued that Congress shouldn’t “profit off the backs of students." They said the bipartisan bill would generate $184 billion of federal revenue over 10 years. They also complained the bill didn’t address college affordability and existing student loan debts.

Merkley said the country needed “bold new initiatives” that prioritize the middle class when it comes to student loans. There is currently $1 trillion in student loan debt in the United States.

He said his bill would cover the upfront costs of a two- or four-year college for undergraduate students, then after graduating, the students would “pay it forward” by contributing a percentage of adjusted gross income for a fixed number of years to fund the program.

Merkley said the bill would allow states to set up pilot programs with public universities to see if the plan could work on a national scale.

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