U.S. Senator Tom Udall has joined a coalition of senators in introducing the Bank on Students Emergency Loan Refinancing Act, which would help rein in college costs by allowing students and graduates with existing student loan debt to refinance at lower interest rates.
A college degree is increasingly critical to qualify for a well-paying job and enter the middle class. But with college costs skyrocketing, and U.S. student loan debt now outstripping Americans’ credit card debt, many students are being forced to think twice about whether they can afford higher education.
Udall is working to ensure college remains within reach of all students. Last summer, he helped lead an effort to prevent student loan rates from nearly doubling for new borrowers, keeping rates at 3.86 percent or less. But the new law did not help existing borrowers, who now are paying nearly 7 percent or more. The Bank on Students Emergency Loan Refinancing Act, which was led by U.S. Senator Elizabeth Warren and cosponsored by Udall and 22 other senators, would apply the same lower rate to all outstanding student loans.
“College loans should open a path to a brighter future, not to a pile of bills with no end in sight. When a student leaves school with so much debt they struggle to pay the bills and they’re barely able to make ends meet, the system is broken,” Udall said.
“I’ve heard from students from across New Mexico who are considering not attending college because they fear they won’t be able to pay off the debt. That’s a choice between two bad options – bad for families and for our economy,” Udall continued. “Ensuring more students can afford college strengthens the middle class and boosts the economy for everyone. Reining in the cost of student loans by allowing borrowers to refinance at a lower rate is the one important step to keeping college within reach for all students.”
Over 60 percent of New Mexico students take out a college loan, and nearly 40 million Americans hold outstanding student loans. At the same time, a shocking 30 percent of Federal Direct student loan dollars are in default, forbearance, or deferment. The Bank on Students Emergency Loan Refinancing Act would help students manage their college debt, better enable graduates to get ahead economically, and reduce the number of loans in default.
The legislation is fully funded by enacting the Buffett Rule, which would limit special tax breaks for the wealthiest Americans that allow millionaires and billionaires to pay lower effective tax rates than middle class families. A companion bill is being introduced today in the U.S. House of Representatives.