Student Loan Cancellation: Congress Proposes 0% Interest Rates 

As President Joe Biden considers whether to enact wide-scale student loan cancellation of $10,000 or $50,000, there are two main proposals in Congress to make student loans interest-free 

1. The LOAN Act; and 2. Zero-Percent Student Loan Refinancing Act

Sen. Marco Rubio (R-FL) proposed the Leveraging Opportunities for Americans Now (LOAN) Act. Here’s how this proposed legislation would work 

1  Eliminate student loan interest on federal student loans; 2  Apply a one-time, non-compounding origination fee that student loan borrowers will pay over the life of their student loan;

3  The origination fee will be 20% of the principal student loan balance for undergraduate student loans and 35% of the principal student loan balance for PLUS student loans;

4 Student loan borrowers automatically will be placed in an income-based repayment (IBR) plan, during which they pay 10% of their adjusted gross income in excess of 150% of the federal poverty line, except in times of unforeseen financial hardship