The Senate will vote next week on legislation co-authored by U.S. Senator Debbie Stabenow that will save millions of Americans money on their student loans and reduce the deficit by billions of dollars. The Bank on Students Emergency Loan Refinancing Act, introduced earlier this week by Senator Stabenow, Senator Elizabeth Warren and others, would allow people to refinance their existing loans, taken out at higher interest rates in the past, at the lower rates available to new borrowers during the 2013-2014 school year, saving them hundreds or thousands of dollars. The legislation is fully paid for and would save taxpayers billions of dollars by enacting the Buffett Rule, which ensures that millionaires and billionaires pay their fair share of taxes.
"People need degrees, not debt. Too many people in Michigan face decades of paying down staggering debt just because they wanted a fair shot to go to college and get ahead," said Stabenow. "That is why I'm fighting alongside Sen. Warren and my Democratic colleagues to help borrowers who are weighed down by massive and unsustainable levels of student debt. Lowering these borrowers' rates will improve the lives of millions of Americans and help boost our economy by allowing them to spend their money on a home, a car, and the needs of their families instead of on interest payments that barely make a dent in their debt."
According to the Project on Student Debt, Michigan ranks in the top ten of states with the highest average student loan debt. In Michigan, the average student loan debt among those who borrow to get a bachelor's degree is nearly $29,000 and 62% of Michigan students have debt when they graduate. Many borrowers are stuck with unsustainable levels of student debt for two and even three decades of their lives.
Under the Bank on Students Emergency Loan Refinancing Act, a borrower with $29,000 in public loans at a 7 percent interest rate would save over $5,400 in interest payments over ten years. A borrower with $100,000 in private loans at a 14 percent interest rate would save nearly $155,000 in interest payments over twenty years.
The legislation has been endorsed by dozens of organizations, including the AFL-CIO, American Federation of Teachers, Center for Responsible Lending, Center for American Progress, the National Education Association (NEA), Service Employees International Union (SEIU), Young Invincibles, and many others.
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.