United States Senator Elizabeth Warren (D-Mass.) today introduced the Bank on Students Emergency Loan Refinancing Act, which would allow those with outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers. The legislation is co-sponsored by Senators Barbara Boxer (D-Calif.), Patty Murray (D-Wash.), Dick Durbin (D-Ill.), Jack Reed (D-R.I.), Mary Landrieu (D-La.), Debbie Stabenow (D-Mich.), Sherrod Brown (D-Ohio), Sheldon Whitehouse (D-R.I.), Mark Udall (D-Colo.), Tom Udall (D-N.M.), Jeanne Shaheen (D-N.H.), Jeff Merkley (D-Ore.), Mark Begich (D-Alaska), Kirsten Gillibrand (D-N.Y.), Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Brian Schatz (D-Hawai'i), Tammy Baldwin (D-Wis.), Chris Murphy (D-Conn.), Mazie Hirono (D-Hawai'i), Heidi Heitkamp (D-N.D.), Edward J. Markey (D-Mass.), and Cory Booker (D-N.J.)
Many borrowers with outstanding student loans have interest rates of nearly 7 percent or higher for undergraduate loans, while students taking out new undergraduate loans pay a rate of 3.86 percent under the Bipartisan Student Loan Certainty Act passed by Congress last summer. The Bank on Students Emergency Loan Refinancing Act would allow our students and young people to pay back their outstanding loans at the same rates that Senate Republicans overwhelmingly embraced just last summer as appropriate for new borrowers.
"Exploding student loan debt is crushing young people and dragging down our economy," said Senator Warren. "Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America."
"It is outrageous that students can't refinance at these historically low interest rates," said Senator Boxer. "This legislation gives students the same fair shot as other borrowers have when interest rates decline."
"Too many Americans across the country are struggling right now with the overbearing financial weight of college debt, and that needs to change," Senator Murray said. "By allowing borrowers to refinance their loans, this legislation would put more money in people's pockets by bringing down the costs of the investments they made in their education. The choice should be clear: Instead of allowing millionaires and billionaires to pay a lower tax rate than middle-class families, we should be helping borrowers better afford their college education."
"For too many of America's young people, pursuing a college education has become a one-way ticket to a lifetime of student loan debt.," said Senator Durbin, author of the Student Loan Borrower Bill of Rights Act. "Giving student loan borrowers the option to opt into a lower interest rate by allowing them to refinance their loans will be a financial relief to millions of families in Illinois and America. I am happy to join Senator Warren on this important issue."
"We can't allow student loan debt to drag down economic opportunity and growth for an entire generation. Students and parents who borrowed at needlessly high rates should be given an opportunity to refinance at a lower rate. The federal government can and should play a more constructive role in giving struggling borrowers the opportunity to refinance and save money and passing this legislation would be a smart step in the right direction," said Senator Reed.
"Today, too many people are saddled with decades of debt just because they wanted a fair shot to go to college and get ahead," said Senator Stabenow. "That is why I'm fighting alongside Senator Warren and my other colleagues to make college more affordable and to help borrowers who are already weighed down by exploding and unsustainable levels of student debt. Helping these borrowers will improve the lives of millions of Americans and boost our economy by allowing them to spend their money on a home, a car, or the needs of their families instead of on interest payments."
"Instead of being saddled with student loan debt, our graduates should be able to start businesses, buy homes, and contribute to their communities," said Senator Brown. "Ensuring that students and graduates can refinance their loans for more affordable monthly payments is not just the right thing to do, it will also strengthen our economy."
"The oppressive debt shouldered by students, graduates, and their families can shadow them for decades and affect everything from their job choices to their ability to buy a house. This legislation would offer students less costly loans and pay for that relief by asking multi-million-dollar earners to pay their fair share of taxes" said Senator Whitehouse, the original author of the Buffett Rule legislation for tax fairness. "I thank Senator Warren for introducing this legislation, and I strongly urge all of my colleagues to support it."
"College loans should open a path to a brighter future to the middle class, not to a pile of bills with no end in sight," said Senator Tom Udall. "When a student leaves school with so much debt they struggle to pay the bills and they're barely able to make ends meet, the system is broken. Reining in the cost of student loans by allowing borrowers to refinance at a lower rate is the one important step to keeping college within reach for all students."
"Across the country people are struggling with the increasing costs of higher education and that's hurting our students and our economy," said Senator Shaheen. "This is especially true in New Hampshire, where an estimated 74 percent of students graduate with debt averaging nearly $33,000. Our plan represents an important step toward addressing the student loan crisis by helping borrowers refinance their student loans and pay down their debts."
"More and more middle class families are seeing the dream of college for their children disappear because of the high cost of a college education and the mountains of debt that students have upon graduation," said Senator Merkley. "I'm committed to strengthening our middle class families instead of forcing Oregonians deeper into debt. This legislation would help Oregonians refinance their student loans and inject our economy with a much needed boost with the savings on interest payments. This is a common sense solution to a huge issue facing our students and middle class families."
"I'm proud to co-sponsor this commonsense bill which will make college more affordable and accessible for Alaskan students and their families," said Senator Begich. "By allowing students to refinance at a lower rate, and giving them more flexible repayment options, we give the opportunity of higher education to millions of students without the crippling burden of debt too many individuals currently face. Making college more affordable is good for our economy, good for our country, and good for Alaska families."
"While a higher education remains the clearest path into the middle class, more of our graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before," said Senator Gillibrand. "This high amount of student debt is dragging down our economy, stopping graduates from buying homes and cars, or starting businesses and families. The solution is right in front us - our graduates should be able to refinance their debt in the same way that our businesses and homeowners do. This will help to strengthen our middle class families instead of forcing us deeper into debt. When we price young people out of a college education we all pay a price. We can't afford any more delay."
"College students in Minnesota often struggle to cobble together the funds necessary to pay for their education, and many still graduate with enormous amounts of debt," said Senator Franken. "And the last thing our students need is to be saddled with high interest rates on student loans that continue to burden them long after graduation. This bill would give Minnesotans the opportunity to cut down their debt and keep more of their hard-earned money."
"Present student debt is crippling - economically, emotionally and morally - making this measure an historic imperative," said Senator Blumenthal. "Young people are postponing purchases likes homes and cars and delaying major life decisions - whether to get married and when to have children - because of crushing student loan debt. We should reward students who invest in their education, not punish them with high interest rates or profit off their backs. By allowing students to refinance their loans, this bill will give graduates a fair shot at better lives and brighter futures."
"A college education is supposed to be a path to opportunity, not a life of debt," Senator Schatz said. "Giving students the opportunity to refinance their loans at a lower interest will make a college degree more affordable and accessible."
"Making college affordable is one of the most important steps we can take toward building a strong path to the middle class for all Americans," said Senator Baldwin. "A college education should be a path to prosperity not a path to indebtedness, but student loan debt is holding back an entire generation and creating a drag on economic growth for our country. The ability to refinance at lower rates provides some relief to borrowers and gives them a fair shot at building a stronger future for themselves."
"As someone who paid for college with the help of student loans, I know how important it is for us to make sure students have access to affordable student loans," said Senator Heitkamp. "The amount of debt North Dakota students are burdened with has skyrocketed. This not only hurts them and their families, but it is a huge drain on our state's economy. The bill I helped put forth today will send the message that we are investing in our young people, just like previous generations invested in me."
"The promise of a college education shouldn't be accompanied by the hopelessness from overwhelming debt," said Senator Markey. "In the same way refinancing helps underwater mortgage holders, students drowning in debt would benefit from refinancing student loans at the current lower rate. This legislation would ensure that current students have access to the same lower interest rates that benefit current borrowers. I thank Senator Warren for her leadership on this important issue, and will work with her and all of my Senate colleagues to support greater access to higher education and to make college more affordable."
"Student loan debt has become debilitating for middle class families and graduates," said Senator Booker. "We see this first hand in New Jersey where graduates face an average debt of $30,335. Student loans should help bring our young people closer to the American Dream, but instead, current interest rates set them up for a lifetime of paying interest. Commitment to our youth means a commitment to responsible reforms."
There are nearly 40 million Americans with outstanding student loans. The Bank on Students Emergency Refinancing Act could lower payments for millions of those individuals by hundreds or thousands of dollars a year. The average student loan debt among those who borrow to get a bachelor's degree is nearly $30,000 - and a shocking 30% of Federal Direct student loan dollars are in default, forbearance, or deferment. Meanwhile, the Government Accountability Office (GAO) recently projected that the government will bring in $66 billion in revenue on its federal student loans made between 2007 and 2012.
The legislation is fully funded by enacting the Buffett Rule, which would limit special tax breaks for the wealthiest Americans that allow millionaires and billionaires to pay lower effective tax rates than middle class families. A companion bill is being introduced today in the U.S. House of Representatives by Representatives John Tierney (D-Mass.) and George Miller (D-Calif.), the senior Democrat on the House Committee on Education and the Workforce.