WASHINGTON - Sen. Jeff Merkley (D-OR), along with Sens. Cory Booker (D-NJ) and Kirsten Gillibrand (D-NY), on Thursday introduced the If It's Good Enough for the Banks, It's Good Enough for Students Act, legislation that would enable student loan borrowers to refinance their federal student loans at the same low rates big banks borrow at.
Nationwide, student debt now totals $1.5 trillion, and millions of borrowers are saddled with unaffordable payments at high interest rates, the senators said
Merkley's bill would allow borrowers to refinance their federal student loans at the same rate big banks get through the Federal Reserve discount window — currently, 3 percent.
With the average student loan borrower currently paying interest rates around 6 percent, and some borrowers facing even higher rates, refinancing could enable many Americans to save thousands of dollars over the life of their loans.
"As the first in my family to graduate from college, I experienced firsthand the power of education to change your life," Merkley said. "I still live in the blue collar community I grew up in, but today, too many parents in my neighborhood are afraid to send their kids to college because they fear they will end up with an unaffordable millstone of debt around their neck.
"Higher education should be an affordable, accessible pathway to the middle class, not a privilege reserved for the wealthy and well-connected. Don't our students deserve the same low interest rates that the big banks get?"
""Over the last several decades, the cost of a college degree has skyrocketed and caused borrowers across the country to accumulate substantial amounts of student loan debt. In New Jersey, students carry a staggering $43 billion in student loans. This overwhelming debt not only burdens our students, but often pushes them into default," Booker said.
"Our bill represents a significant step towards addressing this crisis by giving students the opportunity to refinance college loans at the same low interest rates the big financial institutions get."
"College students all over the country are buried in debt by the time they graduate. This is a crisis that is holding back an entire generation of Americans, and Congress needs to act now to solve it," Gillibrand said. "I'm proud to support this legislation to finally allow our students to refinance their Federal student loans at the same rate as any other type of loan, because the federal government should not be making a profit off the backs of our students. I urge my colleagues to fight with me to pass this urgently needed bill so we can help ease this enormous burden for our graduates."
Unaffordable student loan payments don't just hurt individual borrowers; they hurt the entire economy, the lawmakers said. As student debt has exploded nationwide, many young Americans have put off buying homes, opening their own businesses, or even starting families while they deal with their student loan burden.
The If It's Good Enough for the Banks, It's Good Enough for Students Act would allow students with federal student loans to refinance their loans at the same low interest rates offered to banks through the Federal Reserve discount window. Under the If It's Good Enough for the Banks, It's Good Enough for Students Act:
· The refinanced rate will be fixed for the period of the loan.
· Refinancing a loan will not result in the extension of the duration of the repayment period of the loan, and all loan borrowers will maintain the same terms and conditions of the original loan.
· Borrowers who are not in default will be able to submit an application within a two-year period to have their loans refinanced at a lower rate.
· The Secretary of Education and the Director of the Consumer Financial Protection Bureau (CFPB) will coordinate to carry out a campaign to alert borrowers of eligible loans so that they know that they are eligible to apply for loan refinancing.
The If It's Good Enough for the Banks, It's Good Enough for Students Act is endorsed by Democracy for America, the American Federation of Teachers (AFT), and the National Education Association (NEA).
The full text of the If It's Good Enough for the Banks, It's Good Enough for Students Act is available here.