Many Americans have outstanding undergraduate student loans with interest rates of 7 percent or higher; however, those who took out loans during the 2013-2014 school year pay a rate of 3.86 percent under the Bipartisan Student Loan Certainty Act, passed by Congress in 2013.
On March 18, 2014, Senators Elizabeth Warren (MA-D) and Representative Joe Courtney (CT-D) introduced the Bank on Students Emergency Loan Refinancing Act. The legislation would allow those with college loan debt to refinance at the lower interest rates. The rates would be slightly higher for graduate student loans. The cost would be paid for by requiring millionaires to pay at least a 30 percent effective Federal tax rate.
A similar bill came to the floor in the last Congress, but fell short of breaking a Republican filibuster.
“Since last year, nearly a million more borrowers have fallen behind on their student loan payments,” said Senator Warren. “The Bank on Students Emergency Loan Refinancing Act would give much-needed to relief to millions of borrowers, help boost our economy, and strengthen America’s middle class.”
On March 25, Senator Warren offered the bill on the Senate floor as an amendment to the budget resolution, but senators rejected it by a vote of 46 to 53.
Senate Budget Committee Chair Mike Enzi (WY-R) objected to the mechanism for considering the bill, saying, “Addressing college costs and the burden of high student debt loans has to be done, but it can’t be done on a budget bill. You can’t have policy on a budget resolution.”
Instead, the Senate approved, by voice vote, an amendment introduced by Senator Richard Burr (NC-R) that would consolidate various Federal student loan programs and give students a choice of accepting a payment plan over 10 years or repaying loans based on income. Senator Burr explained that, with his legislation, “students will know, prior to entering college, based on the amount that they borrow, what options will be available to them once they graduate from college.”
Senator Mark Warner (VA-D), a cosponsor of the amendment, said, “It’s time to replace our complicated array of loans, subsidies, deferments, and forbearances with streamlined, improved repayment options where graduates repay what they borrow based on what they earn.”
For more background and legislative history, see the November 2009 issue of Congressional Digest on “Federal Student Loans.”
