NEWPORT, R.I. With the U.S. Senate expected to consider legislation that would lower student loan payments, U.S. Senators Jack Reed and Sheldon Whitehouse held a discussion Thursday with students, financial aid experts, and community leaders at the Community College of Rhode Island’s Newport campus.
The senators heard from Rhode Islanders who are struggling to pay back student loans as well as from CCRI financial aid professionals and Susan Arnold, CEO of the RI Association of Realtors, who discussed how rising student loan debt and defaults are hurting the housing market.
The Senate is expected to hold a procedural vote next week on the Bank on Students Emergency Loan Refinancing Act. The legislation, which Reed helped to craft and which both senators strongly support, would allow millions of individuals with student loan debt to refinance their loans at lower rates.
Many loans that were dispersed during the last decade came with high interest rates, with some loans exceeding 8 percent. As a result, the Government Accountability Office (GAO) estimated that the federal government would earn an estimated $66 billion from student loans originated between 2007 and 2012.
The Bank on Students Emergency Loan Refinancing Act would allow existing borrowers to refinance using applicable 2013-2014 federal loan rates, which range from 3.86 percent for undergraduate loans to 6.41 percent for certain graduate and professional school loans.
“Students deserve a fair shot at an affordable education,” Reed said. “Federal student loans are supposed to be an investment in helping individuals reach their potential and strengthening our communities, not a revenue generator for the government. So one of the ways we’re trying to help is by allowing student loan borrowers with high fixed rates to refinance at a lower rate.”
“The message we heard today was clear: Rhode Islanders need relief from the student debt burden,” Whitehouse said. “Student loan debt is hurting our economy by pinching household budgets and limiting the ability of graduates to buy a home or make other long-term financial decisions. ”
The legislation would allow roughly 25 million student loan borrowers – including an estimated 88,000 Rhode Islanders – to refinance their student loans at lower rates, saving each borrower an average of $2,000 over the life of his or her loan.
It would be fully paid for by implementing the Buffett Rule – legislation Whitehouse first introduced in 2012 – that would require multi-million dollar earners to pay an effective federal income tax rate at least as high at that paid by millions of middle-class families.
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With the U.S. Senate expected to consider legislation that would lower student loan payments, U.S. Senators Jack Reed and Sheldon Whitehouse held a discussion Thursday...