Lawmakers Introduce Interest-Free Loans Bill - WLNS TV 6 Lansing - Jackson | Your Local News Leader

Lawmakers Introduce Interest-Free Loans Bill

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LANSING, Mich. (WLNS) - In an effort to fight skyrocketing higher education tuition costs, Michigan lawmakers introduced on Tuesday legislation that would offer interest-free loans to students with the expectation that those students would repay the loans according to what they earn, not what they were loaned.

State representatives say the Smarter Michigan and Retaining Talent (SMART) Act is an innovative and necessary measure to help fight the student loan crisis facing the state and the country. "Instead of the high interest payments and paying all this interest and that going back to the banks, you're investing in future kids to be able to go to college," said State Rep. Theresa Abed (D-Grand Ledge). "It's just a win-win situation."

Lawmakers say when graduates repay their loans, the money will go back into the SMART fund to help cover tuition costs for current students. Right now, lawmakers say they need $2 million to fund the pilot program, which will pay for tuition for several hundred students at Michigan universities and community colleges.

For every one year students take out loans for their education, they would have five years to repay, and would pay that money back at a rate of four percent of their income so long as their earnings are above the federal poverty line.

The legislation is aimed at low and middle-income students, and lawmakers say there would be a means test to be eligible.

Democratic state representatives David Knezek (D-Dearborn Heights), and Theresa Abed, (D-Grand Ledge) and State Senator Jim Ananich, D-Flint, are sponsors of the bill. Ananich introduced the bill in the Senate on Thursday.

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