Tierney, Miller Introduce Student Loan Refinancing Bill to Help Make Paying for College More Affordable
WASHINGTON—Millions of student loan borrowers would save thousands of dollars under the new legislation being introduced today by Rep. John Tierney (D-MA) and Rep. George Miller (D-CA), the senior Democrat on the House Committee on Education and the Workforce. The Bank on Students Emergency Refinancing Act would allow borrowers to refinance federal and private student loans to the lower rates that are currently available to new borrowers.
Nearly 40 million Americans are working to repay $1.2 trillion in student loans, thanks in part to skyrocketing tuition rates. The average student loan debt is nearly $30,000, and graduates are struggling to pay, with a third of all student loan dollars issued through the Federal Direct program currently in default, forbearance, or deferment.
Yet current law prevents hard-working, responsible borrowers from refinancing their student loans to the same historically low interest rates that those who have home and auto loans have access to today. Despite the lagging economy, graduates are often stuck with interest rates at 8 percent, 12 percent, or even higher.
For example, a middle-class graduate who borrowed the national average of around $30,000 through unsubsidized federal loans to pay for their undergraduate education would save more than $4,000 in interest payments by refinancing under this legislation.
Similarly, someone who took out $40,000 for their graduate degree would save more than $2,500 in interest payments, and parents who borrowed $50,000 to pay for their child’s education would save more than $3,500.
“Student loan debt is hurting our economy and holding back a generation of Americans,” said Tierney. “That’s why Senator Elizabeth Warren, Congressman George Miller and I are introducing legislation today to help tens of millions students refinance their existing loans and obtain the same low rate being offered to new loan borrowers. Homeowners and businesses are often able to refinance their debts. Students should be able to do the same. This bill is a responsible solution, and its cost is offset by implementing the ‘Buffet Rule’ and ensuring millionaires and billionaires pay their fair share in taxes. Congress should immediately act on this important bill.”
“All across the country, steep student loan interest rates are combining with skyrocketing tuition increases to prevent hard-working graduates from realizing the American Dream,” said Miller. “Our nation’s young people are being forced to move back home, prevented from starting new businesses, held back from marriage and starting a family, or otherwise made to put their lives on hold. That’s not right. By permitting graduates to refinance their student loans, we’re helping them get back on a path to prosperity. This legislation would save a middle-class undergraduate student borrower with an average student loan debt more than $4,000 over the life of the loan. That’s real money.”
This legislation builds on House Democrats’ record of supporting our nation’s students and the inclusion of a provision in our budget legislation that would allow borrowers to refinance their student loans.
The would allow student loan borrowers with public or private loans who borrowed before 2013 to refinance their loans to the lower market-based rates established for students last summer in the Bipartisan Student Loan Certainty Act of 2013. Loans borrowed for undergraduate education would be refinanced to 3.86%; loans borrowed for graduate education would be refinanced to 5.41%; and loans borrowed by parents for their child’s education would be refinanced to 6.41%.
A companion bill is being introduced today in the U.S. Senate by Senator Elizabeth Warren with at least 23 Senate Democratic cosponsors
Learn more about the Bank on Students Emergency Refinancing Act here.
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