Lorraine Galvis and her family. (Contributed photo)

Lorraine Galvis kept making her federally-backed student loan payments throughout the COVID pandemic, even though Congress approved a temporary pause. 

Those payments even continued even though she missed work due to chemotherapy treatment for breast cancer. That’s because, for the first time, her payments were going toward her principal, and not to interest. 

“I know that seems crazy because it was COVID and they didn’t have to get paid back anyway, but I couldn’t find any other opportunity to make a dent,” she said. 

That opportunity has vanished for millions of borrowers like Galvis because the pause ended on Oct. 1, meaning loan servicers can once again charge interest. 

U.S. Rep. Joe Courtney, D-2nd, is pushing legislation that would eliminate the interest on federal student loans for roughly 43 million Americans with loans. 

It would also set interest for future borrowers on a sliding scale based on need. Courtney said the scale would be a disincentive for students, those from wealthier families, from taking out loans they don’t need.  

He sees the bill as a compromise between supporters of President Joe Biden’s debt forgiveness plan and critics who said those loans shouldn’t add to the national deficit or become the responsibility of taxpayers. 

Lorraine Galvis with U.S. Rep. Joe Courtney (Contributed photo)

“We’re not increasing the deficit by eliminating interest and we’re not asking other U.S. taxpayers to cover the cost of that elimination,” said Courtney, a senior member of the House Education and Workforce Committee. 

Galvis, a 42-year old lawyer, supports the plan, saying she has no problem paying back her loan. It’s the interest that she has a problem with. 

Galvis estimates she’s paid $40,000 since graduating New York Law School in 2014, but only $10,000 of that has gone toward the original $179,000 loan. 

Even when she’s tried to pay extra to lower her principal, she said the servicer has put that money toward interest payments. 

“The government is acting like a loan shark,” she said. 

Now she and her family — her husband joined the Coast Guard during the pandemic — are forced to cut costs everywhere they can so she can afford her student loan payments. 

“There’s no discretionary income, really living, I feel like, on a kind of a college budget,” Galvis said. 

Courtney said the federal government has passed legislation before to help students. That includes legislation in 2007 to cap interest rates and again in 2013 to limit rates by tying them to the 10-year Treasury Yield. 

That was not a problem until recently, but Courtney said interest rates for the U.S. Education Department’s Stafford Loans are now back to 5.5% for new undergraduate borrowers and 7.05% for graduate students. 

Lorraine Galvis speaking at ECSU (Contributed photo)

Courtney is working to build Republican support, noting past legislation was passed with bipartisan support. He’s hopeful his bill can do that, even while Congress has to find a new speaker and address another looming budget crisis before entering an election year in 2024. 

“I think this issue is going to have a life of its own,” he said. 

The bill would also create a trust fund to pay for the student loan program’s administrative costs. Any additional revenue from the trust fund would be used to increase the value of Pell Grants and as an incentive for colleges and universities to keep costs down.

Some of the money would fund competitive grants for schools that raised tuition by an average of no more than 2% over a period of three years. 

Higher education enrollment is dropping all over the country, and Courtney thinks schools will be forced to cut costs. 

“The contraction that’s going to be happening in higher ed is going to force colleges to really start sharpening their pencils,” he said.