WASHINGTON, DC – U.S. Senator Kirsten Gillibrand joined 15 of her colleagues in co-sponsoring Senator Elizabeth Warren’s Bank on Students Emergency Loan Refinancing Act, which includes Gillibrand’s proposal to allow those with outstanding federal student loan debt to refinance at lower interest rates. 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. Warren’s Bank on Students Emergency Loan Refinancing Act would allow our students and young people to pay back their outstanding loans at the same rates as new borrowers.
The legislation is co-sponsored by Senators Barbara Boxer (D-CA), Richard Durbin (D-IL), Jack Reed (D-RI), Mary Landrieu (D-LA), Debbie Stabenow (D-MI), Tom Udall (D-NM), Jeanne Shaheen (D-NH), Mark Begich (D-AK), Al Franken (D-MN), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Tammy Baldwin (D-WI), Mazie Hirono (D-HI), Ed Markey (D-MA), and Cory Booker (D-NJ).
"While a higher education remains the clearest path into the middle class, more of our graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before," said Senator Gillibrand. "This high amount of student debt is dragging down our economy, stopping graduates from buying homes and cars, or starting businesses and families. The solution is right in front us- our graduates should be able to refinance their debt in the same way that our businesses and homeowners do. This will help to strengthen our middle class families instead of forcing us deeper into debt. When we price young people out of a college education we all pay a price. We can’t afford any more delay."
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.