A new bill introduced into Congress on Wednesday could give relief to millions of college graduates and their families (if passed, of course).
The bill- titled “The Bank of Students Emergency Loan Refinancing Act”- would attempt to lower interest rates for a range of borrowers. Ivana Saric of DailyCal.org summarized the basic parameters of the bill nicely:
With the passage of the bill, certain existing undergraduate student loans could be refinanced down to a 3.86 percent annual interest rate, graduate student loans could be refinanced to 5.41 percent, and parent loans could be refinanced to 6.41 percent. This would save borrowers on average $2,000 per loan.
For reference, here are the current interest rates on student loans, as provided by StudentAid.ed.gov:
The bill was introduced on Capitol Hill by Massachusetts Senator Elizabeth Warren (D) and Connecticut Representative Joe Courtney (D), and it is co-sponsored by over 100 other legislators (79 members of the House and 28 senators). In a statement released by his press office, Rep. Courtney said (in part):
Student debt—which surpassed $1 trillion last Congress—hinders our economy because it delays borrowers from major investments, including buying a home, starting a business, and saving for retirement. As higher education becomes more crucial than ever to secure a good-paying job, keeping college affordable must be a top priority in Washington.
According to Rep. Courtney’s statement, the Congressional Budget Office (CBO) estimates that about $460 billion worth of current student loans would be eligible for refinancing if this proposal were to pass (which works out to about half of borrowers).
Sen. Warren introduced a similar bill in the Senate last September, but it was shot down by Republicans in the chamber. At the time, some members of the G.O.P. opposed the proposed bill because it would raise taxes on the wealthy through implementation of a 30% tax payment on income of people making $1-2 million (also known as the “Buffet Rule”). As of yet, it is not known if the latest version of the interest rate bill would be tied to the Buffet tax proposal.