Today is the day to urge your senator to stand for students over millionaires by voting for the Bank on Students Emergency Loan Refinancing Act.
The bill – almost identical to a bill Sen. Elizabeth Warren introduced in May – would allow borrowers with existing student loan debt, many with interest rates near 7 percent or more, to refinance at the same rate undergraduates receive, which is currently 3.86 percent.
The Senate is scheduled to vote on this piece of common-sense legislation Wednesday. And with only 39 cosponsors, there is a good chance it will be successfully filibustered by Republicans. Call 202-517-2321 to use our click-to-call tool to let your senator know that you stand with the 40 million Americans who have existing student loan debt.
Homeowners can refinance a mortgage at under 4 percent. Car loans are available for under 3 percent. Yet college graduates are stuck paying artificially inflated interest rates for simply getting an education. This is fundamentally wrong.
The U.S. is now on the verge of reaching $1.3 trillion in student loan debt – exceeding all credit card debt. Outstanding student loan debt now averages $29,400 per graduate. And a recent analysis by the Congressional Research Service found that refinancing would save the average graduate $4,000 over the life of his or her loans.
These cruel debts are forcing young adults to put off major life decisions like getting married and purchasing a home. An Internet survey conducted last year found that student loan debt may reduce new vehicle spending by as much as $6.4 billion annually in the U.S. In that same survey, respondents reported that it took them on average 19.7 years to repay a bachelor's degree loan, with an average monthly payment of nearly $500. This is a true economic emergency.
If Republicans were truly focused on addressing college affordability while reducing the national deficit, passing the Warren bill would be a no-brainer. The Congressional Budget Office estimates that Warren’s proposal would actually reduce the deficit by almost $14 billion over 10 years. Although the bill would cost around $58 billion in direct spending over that same period, it’s fully paid for by enacting the “Buffett rule,” which would ensure that millionaires pay an income tax rate of at least 30 percent, instead of rates lower than what middle-class workers pay. This would raise $72 billion. Overall, refinancing would help stimulate the economy by putting $62.9 billion back into the pockets of 25 million Americans.
These are policies that most Americans across all demographics support, with 71 percent believing Congress should pass the “Buffet rule” and 91 percent agreeing that interest rates on student loans should not be higher than on regular consumer loans.
Just as with minimum wage, equal pay for women, and now student loans, Republicans will continue to obstruct progress on the policies the majority of Americans support. Why? There is no sound or logical reason except for political theater that panders to an elitist agenda. After all, Republicans are the ones who supported the 3.86 percent rate during last July’s Bipartisan Student Loan Certainty Act of 2013, when both the Senate and House voted in support of this interest rate for guaranteed undergraduate student loans. Even House Speaker John Boehner lauded the legislation, calling it a “market-based solution” that was “consistent” with Republican policies. Sen. Richard Burr (R-N.C.) said the agreement “ensures access and affordability for students.” Fast forward less than a year later and GOP sentiment has quickly changed.
The legislation that Democrats will bring to the floor Wednesday is already the compromise position. Last year’s deal divided the Wall Street Democrats from the Main Street ones, as populists like Warren fought for the same rates big banks receive (0.75 percent) while the White House supported an agreement that kept interest rates for current undergraduates from doubling but did nothing to help existing borrowers saddled with debt.
Warren has made it clear that 3.86 percent is still too high. And she’s right. But it’s a step in the right direction and a vital step toward addressing our student debt crisis.