Central South Dakota News

U.S. Senator Mike Rounds (R-S.D.) has introduced legislation aimed at offering a new affordable student loan option that leverages private financial institutions to cover college costs. The Affordable Future Loan Program Act proposes guaranteed loans made through eligible lenders, ensuring no interest accrues while students are in school, thus providing a sustainable and affordable solution.

The program would exist alongside the current federal system, offering an additional financing option for students who need to bridge the gap between federal aid and the cost of attending most public institutions. It draws inspiration from the Federal Family Education Loan Program (FFEL), created by the Higher Education Act of 1965 but repealed in 2010. Since then, all federal loans have been issued by the Department of Education (ED).

“Students in South Dakota and across the nation need a more affordable way to take out loans and pay for higher education,” said Rounds. “The Affordable Future Loan Program would allow students to use private financial institutions to take out federal loans. By utilizing the efficiencies of the private sector and providing enough financing to cover the actual cost of going to school, this program will ultimately save money for hardworking students and their families. While it doesn’t change any existing programs, this bill would provide a low-interest choice for financing education and take Washington bureaucrats out of the process.”

Jeff Olson, President-CEO of Dakota Credit Union Association, commented on the initiative: “With guaranteed loans that do not accrue interest while students are in school, the act provides a lifeline to students who struggle to bridge the gap between federal aid and the rising costs of higher education. Senator Rounds’ innovative approach will make higher education attainable for all Americans, preserving the dream of college for future generations.”

Jim Nussle, President/CEO of America’s Credit Unions, also expressed support: “Choosing a college or trade school is a decision most students look forward to making, but with rising costs and a decrease in available financing, these decisions have become an impossible burden for middle-class families. Senator Rounds’ Affordable Future Loan Program Act – legislation that America’s Credit Unions fully supports – brings new life to these important, life-altering decisions."

South Dakota Senator Steve Kolbeck shared his optimism: “I appreciate Senator Rounds trying to pull together local, state, and federal stakeholders in education. It’s clear he wants to keep what is working, fix what is broken, and bring back what has worked in the past."

Dylan Clarkson, President & CEO of Pioneer Bank & Trust and Chairman of the South Dakota Bankers Association remarked: “I commend Senator Rounds for addressing the issue of student loan reform and looking for ways to include the private sector in this solution.”

Under Rounds’ plan, federal student loans would be issued through private financial institutions with 98% guarantees by the federal government when attending accredited institutions. Students could borrow amounts equal to average public university costs plus room and board without accruing interest while in school. The interest rate would be set by Treasury 10-year notes instead of Congress.

The maximum interest rate under this plan is capped at 6.28%, compared to current ED rates ranging from 6.53%-9.08%.

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