Fairness in Student Loan Lending Act

Floor Speech

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Mr. McDERMOTT. Mr. Speaker, in an effort to provide students and
families much need relief and protection from crippling student loan
debt, Congressman Jim McDermott (D-WA), a senior member of the Budget
and Ways and Means Committees, today introduced legislation that would
save students and parents thousands of dollars by allowing student loan
borrowers to refinance their federal and private student loans. The
Fairness in Student Loan Lending Act will also allow holders of private
student loans the ability to discharge their debt in bankruptcy, which
is not currently permitted.

Federal law currently prevents responsible student loan borrowers
with federal student loans in good standing from refinancing their
loans to a lower rate. This has left millions of students and parents
holding loans with interest rates of 7 percent. Under the Fairness in
Student Loan Lending Act, student loan borrowers in good standing will
be able to refinance their loans to a rate equal to the 10-year
Treasury note on the last day of business of the previous month plus
one percent. For example, a borrower who refinances on February 2015
would refinance to a rate of 2.64%.

While federal law allows borrowers to discharge many types of debt
during bankruptcy, including car loans and gambling debt, student loans
holders are not permitted to discharge their student loans during
bankruptcy. The Fairness in Student Loan Lending Act provides a
mechanism that allows borrowers holding private loans the ability to
discharge these private loans during bankruptcy.

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