Senators Durbin, Warren, Reed Introduce Legislation Giving Students A Fair Shot At An Affordable Education
Bank on Students Emergency Refinancing Act Would Allow Borrowers to Refinance Existing Student Loans at Today's Rates
[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) joined U.S. Senators Elizabeth Warren (D-MA) and U.S. Senator Jack Reed (D-RI) today introducing the Bank on Students Emergency Loan Refinancing Act, which would allow those with outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers. Durbin, Warren, and Reed have been working together on efforts to build broad support in the Senate for legislative action to reduce new student loan debt and make it easier for millions of working families to manage the student loan debt they already have.
Many borrowers with outstanding student loans have interest rates of nearly 7 percent or higher for undergraduate loans, while students taking out new undergraduate loans pay a rate of 3.86 percent under the Bipartisan Student Loan Certainty Act passed by Congress last summer. The Bank on Students Emergency Loan Refinancing Act would allow our students and young people to pay back their outstanding loans at the same rates that Senate Republicans overwhelmingly embraced just last summer as appropriate for new borrowers.
“For too many of America’s young people, pursuing a college education has become a one-way ticket to a lifetime of student loan debt,” said Senator Durbin, author of the Student Loan Borrower Bill of Rights Act. “Giving student loan borrowers the option to opt into a lower interest rate by allowing them to refinance their loans will be a financial relief to millions of families in Illinois and America. I am happy to join Senator Warren on this important issue.”
“Exploding student loan debt is crushing young people and dragging down our economy,” said Senator Warren. “Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America."
“We can’t allow student loan debt to drag down economic opportunity and growth for an entire generation. Students and parents who borrowed at needlessly high rates should be given an opportunity to refinance at a lower rate. The federal government can and should play a more constructive role in giving struggling borrowers the opportunity to refinance and save money and passing this legislation would be a smart step in the right direction,” said Senator Reed.
There are nearly 40 million Americans with outstanding student loans. The Bank on Students Emergency Refinancing Act could lower payments for millions of those individuals by hundreds or thousands of dollars a year. The average student loan debt among those who borrow to get a bachelor’s degree is nearly $30,000 – and a shocking 30% of Federal Direct student loan dollars are in default, forbearance, or deferment. Meanwhile, the Government Accountability Office (GAO) recently projected that the government will bring in $66 billion in revenue on its federal student loans made between 2007 and 2012.
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. A companion bill is being introduced today in the U.S. House of Representatives by Representatives John Tierney (D-Mass.) and George Miller (D-Calif.), the senior Democrat on the House Committee on Education and the Workforce.
The Bank on Students Emergency Refinancing Act is co-sponsored by Senators Barbara Boxer (D-Calif.), Patty Murray (D-Wash.), Mary Landrieu (D-La.), Debbie Stabenow (D-Mich.), Sherrod Brown (D-Ohio), Sheldon Whitehouse (D-R.I.), Mark Udall (D-Colo.), Tom Udall (D-N.M.), Jeanne Shaheen (D-N.H.), Jeff Merkley (D-Ore.), Mark Begich (D-Alaska), Kirsten Gillibrand (D-N.Y.), Al Franken (D-Minn.), Richard Blumenthal (D-Conn.), Brian Schatz (D-Hawai’i), Tammy Baldwin (D-Wis.), Chris Murphy (D-Conn.), Mazie Hirono (D-Hawai’i), Heidi Heitkamp (D-N.D.), Edward J. Markey (D-Mass.), and Cory Booker (D-N.J.)
Earlier this year, Durbin, Warren, and Reed introduced two pieces of legislation – the Student Loan Borrower Bill of Rights Act and the Protect Student Borrowers Act of 2013 – to ensure basic protections for students and to help manage the student loan debt crisis. The Student Loan Borrower Bill of Rights Act would ensure struggling student loan borrowers are treated fairly and understand the full range of repayment options and resources available to them. The Protect Student Borrowers Act of 2013 would help make institutions of higher education more accountable for student indebtedness by requiring institutions to assume some of the risk of a student loan default. More information on both pieces of legislation is available here.