U.S. Senator Tammy Baldwin Co-Sponsors Student Loan Refinancing Legislation
515,000 Wisconsin Federal Student Loan Borrowers Could Benefit from Refinancing Bill, Senate Will Vote on Bank on Students Emergency Loan Refinancing Act Wednesday
Washington D.C. – As the U.S. Senate nears a Wednesday vote on student loan refinancing legislation, U.S. Senator Tammy Baldwin is urging her colleagues to support the bill and help ease the debt burden on the 25 million federal student loan borrowers estimated to benefit from refinancing. The Bank on Students Emergency Loan Refinancing Act would allow borrowers with federal and private undergraduate loans at high interest rates to refinance at today’s lower rates of 3.86 percent with no refinancing fees.
“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. I am proud to co-sponsor this legislation because it addresses the student loan debt crisis by providing relief to more than 500,000 Wisconsin borrowers. This crisis demands action and this commonsense legislation will help give students a fair shot at getting ahead and building a stronger future for themselves.”
Outstanding student loans now total more than $1.2 trillion, surpassing total credit card debt. Each year, students are taking on more and more debt. An astonishing 71 percent of college seniors had debt in 2012, with an average outstanding balance of $29,400 for those who borrowed to get a bachelor’s degree. The Department of Education estimates that about 25 million borrowers would be likely to refinance under this legislation, including 515,000 Wisconsinites. Borrowers would receive an average savings of $2,000 over the life of the loan.
Key federal agencies like the Federal Reserve, the Treasury Department, and the Consumer Financial Protection Bureau have weighed in on the dangers of exploding student debt. This debt is stopping a growing proportion of families from buying homes, saving for retirement, starting small businesses, and making purchases that will keep our economy on the road to recovery.
Last year, large bipartisan majorities – including nearly every Republican in Congress - agreed that federal loan rates were far too high and voted to lower them this year for new borrowers – but did nothing for existing borrowers. With interest rates near historic lows, homeowners, businesses, and even local governments with good credit regularly refinance their debts – but students have few options. Even though the federal government is by far the biggest student lender, it offers no refinancing option.
This legislation would give student loan borrowers a chance to refinance their debt at the same low rates offered to new borrowers in the student loan program:
- Allows eligible student loan borrowers to refinance their federal loans. All eligible federal FFELP and Direct student loan borrowers could refinance their high-interest loans down to the rates offered to new federal borrowers in the 2013-2014 school year under the Bipartisan Student Loan Certainty Act.
- Allows eligible student loan borrowers to refinance their private loans into the federal program. The bill provides those who meet certain eligibility requirements and are in good standing the option of refinancing their high-interest private student loans down to the rates offered to new federal student loan borrowers this year. Those who refinance will also have access to the benefits and protections of the federal student loan program. Participation is fully voluntary.
- Eliminates tax loopholes for millionaires and billionaires. The cost of refinancing is offset by implementing the Buffett rule, which ensures that millionaires and billionaires pay their fair share in taxes. In 2012, Baldwin served as the lead sponsor in the House of Representatives of the Paying a Fair Share Act, also known as the Buffett Rule.
“I’ve had the chance to hear from Wisconsin students. And they shared with me their concerns and the burden the cost of a higher education puts on them and their families,” said Baldwin. “Their message to Washington is simple- there is debt crisis in America and it is time to take action. The choice here is clear, we can continue protecting tax loopholes for millionaires and billionaires, or we can make them pay their fair share and provide relief to middle class families struggling with student loan debt.”
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