Washington-- Interest would not accrue on federal student loans for active duty soldiers and their spouses under the Interest Relief Act introduced today by U.S. Senator Evan Bayh. For those activated for 12 to 15 months, the bill could mean an average savings of between $1,183 and $1,479 in interest over their activation period, according to Congressional Research Service estimates.

"The principle behind this bill is very simple: When Americans go off to serve their country during time of war, the government should not charge interest on their federal student loans,” Senator Bayh said. “This is relief we can and should provide for our soldiers right now.”

Under the Interest Relief Act, eligibility would include active duty soldiers of any branch of the military, including reserve units and the National Guard and their spouses, who have student loans through the Federal Direct Loan Program. The interest accrual deferment could be for up to five years while on active duty. Members of the armed forces can already defer payments on their student loans while on active duty, but the interest continues to accrue.

“There is no reason our soldiers should return from the theater of war and face greater financial debt than necessary,” Senator Bayh said. “Our service men and women, and their families, are already putting so many aspects of their lives on hold during their deployment. This is one more way we can honor their sacrifice and ease their transition from active duty service.”

Many soldiers take advantage of educational benefits through the G.I. Bill following their service. However, those who enter the service or are activated after they’ve completed a few years of college, earned their degree or exhausted their G.I. Bill benefit time limit have often used student loans to finance their education.

“By deferring interest accrual for those who have student loans, we remove one more hurdle that our soldiers and their families face when they are planning their future after active duty service,” Senator Bayh said. “This relief could shave a few months off student loan repayment obligations, which could mean military families are a few months closer to buying their first home, starting a business, or contributing to a child’s college fund.”

The Interest Relief Act would apply only to student loans awarded through the Federal Direct Loan Program, which provides financial aid for college to student and parent borrowers directly through the U.S. Department of Education.

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