Democratic members sponsor legislation to let borrowers refinance student loans at lower rates

A bill was re-introduced in the U.S. Senate and House this week that would allow students with outstanding student loan debt to refinance at current federal interest rates before they rise.

The Bank on Students Emergency Loan Refinancing Act was first introduced in the 13th Congress, but failed to pass. Since the original bill was introduced, student loan debt has grown by about $200 billion, the bill’s sponsors, Sen. Elizabeth Warren (D-MA) and Rep. Joe Courtney
(D-CT) said.

In 2015, 70 percent of college seniors graduated with debt. This year, more than one in four borrowers are in delinquency or in default on their student loans. According to a recent analysis, a quarter of borrowers default over the life of their loans.

The sponsors said that with interest rates scheduled to rise again this summer, it is urgent for Congress to address this legislation to allow borrowers to access today’s lower rates.

“President Trump talked about student loans when he was on the campaign trail, campaigning on the idea that the federal government should not be making a profit off the backs of hardworking students – but talk is cheap,” Warren said. “Since taking office, President Trump seems to have lost all interest in students and their student loans, as he and Secretary DeVos deliver one blow after another to hardworking borrowers. I urge the President to stop his Department of Education’s attacks on students, support this legislation, and demand action from his Republican colleagues.”

Courtney said rising college costs are compounded by the fact that student loans often come with higher interest rates than mortgages, car loans, and other forms of consumer lending which can be refinanced.

“This bill will help ease the burden of student debt by finally allowing undergraduate borrowers to refinance their loans and take advantage of today’s new lower rates,” Courtney said. “Student debt hinders our economy because it delays or prevents borrowers from making other major investments including purchasing a home, starting a business, or simply saving for retirement. A college degree has become a critical part of securing a good-paying career and that is why keeping college affordable must be a top priority in Washington.”