Dupage Policy Journal

Based on current provisions in the Servicemembers Civil Relief Act (SCRA) of 1940, service members’ interest rates are capped at 6 percent on loans taken out before entering active duty military service. If a servicemember consolidates or refinances their student loans, however, the new loan is no longer eligible for this protection, preventing them from taking advantage of the Public Service Loan Forgiveness program and the interest rate cap.

The Servicemember Student Loan Affordability Act would permit pre-service private or federal student loan debt to be consolidated or refinanced, while retaining the 6 percent rate cap under SCRA.

“Loan refinancing and consolidation is a practical, effective way to manage student loan debt,” Durbin said. "Taking advantage of today’s historically low interest rates is a smart financial decision that could save borrowers thousands of dollars over the life of the loan."

Many military families avoid refinancing pre-service student loans because of current SCRA provisions. 

“Our service men and women are willing to give their lives for this country, and it is imperative that we support them in every way possible,” Duckworth said.