Sen. Gillibrand Makes Renewed Push For Student Loan Refinancing
With student loan debt sailing past the trillion-dollar mark, U.S. Senator Kirsten Gillibrand of New York is once again pitching a proposed law to let federal loan borrowers reduce their student debts by refinancing.
One year ago, Gillibrand introduced legislation that would ease the burden for students who have borrowed to pay for their education. Early this year the New York Democrat was hopeful President Obama would use his State of The Union address to help push for the measure that would impact nearly nine in 10 federal student loans. "In fact, nearly 12 percent of graduates nationwide are delinquent in their student loan repayments."
Gillibrand's bill has been superceded by a broader one: the Bank on Students Emergency Loan Refinancing Act introduced last week was written by Massachusetts Senator Elizabeth Warren. It would drop interest rates to 4 percent. Gillibrand says refinancing could boost the economy by freeing up disposable income. "We have to do something to keep student loan interest rates low and manageable, so that our hard working young people can get ahead instead of further behind from the spiral of debt."
She noted homeowners and businesses refinance their loans, so why not allow students to do likewise?
Gillibrand warns that student debt is pulling the national economy down, impeding graduates from buying homes and cars or even starting businesses and families. The senator says that in New York state alone, college grads are weighed down by a combined estimated $60 billion in student loan debt, with students on average owing $27,000, exactly where Kateri Turner stands today. The 27-year old SUNY ESF grad struggles to make ends meet. "I have been paying roughly a hundred dollars a month for my loan since that's really all I can afford at this time, working with a non-profit organization, within a year, I now owe a thousand dollars more because of the student loan interest rates, I cannot keep up with them. I have 6.55 percent on my student loans and even paying a hundred dollars a month, I now owe a thousand dollars more."
Turner says she's looking for things to give up so she can divert more cash to paying on her loan. "I don't know if I have to not have a car anymore, but something needs to change in order for me to get out of this debt."
Gillibrand says, "When we price young people out of a college education, we all pay a price." She pointed out that while a higher education remains the clearest path into the middle class, graduates and middle-class families are burdened by student loans more than ever before, and desperately need relief. "Re-financing just the federal student loans at four per-cent would generate personal savings around the country of 14-point-5 billion dollars. So that's a huge amount of savings that would be pumped back into the economy that's a Center For American Progress report number."
Gillibrand told reporters the bill will likely come up on the Senate floor next month, but without any Republican backers, it has an uncertain future.