Bank on Students Emergency Loan Refinancing Act Slashes Student Debt

Over the last decade our nation’s student loan debt has tripled, from $364 billion to over $1.2 trillion dollars. This week Senator Elizabeth Warren introduced the Bank on Students Emergency Loan Refinancing Act, new legislation that would give people a chance to refinance their existing student loan debt at a much lower rate of interest. This proposed economic stimulus could positively transform our nation’s economy in a huge way, putting billions of dollars back into the pockets of hard working families, and lessening the financial burden of everyone who is still struggling to repay their education debt.

The Massachusetts Senator explained how student debt is destroying our country’s economy, and why implementing this legislation is such a pressing an emergency:

“Exploding student loan debt is crushing young people and dragging down our economy. Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn’t go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America.

Allowing students to refinance their loans would put money back in the pockets of people who invested in their education. These students didn’t go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America.”

The new bill would allow everyone who still carries privately held student loans, which often have grossly inflated interest rates as high as 8 or 9 percent, to refinance directly through the Federal Direct Loan program at the current 3.86 rate. Under the Student Loan Certainty Act, which was passed by Congress last summer, all new undergraduate loans are now being financed with the lower interest, but millions of college graduates are still forced to pay nearly triple those rates on their existing education debt. 

As income inequality flourishes, mammoth financial institutions continue to make record profits, while many families are still fighting to find work and pay their monthly bills. Slightly lowering the amount of profit that is made off the backs of working class people trying to educate themselves is both smart and sensible. The Massachusetts Senator explained to MassLive.com why these simple reforms are being proposed:

“When interest rates drop, people can refinance their home, they can refinance their business debt. It’s regarded as a smart move for any consumer or business. But student borrowers are prohibited from doing that under most programs. This bill says we’re going to change that and let them refinance that down to current low rates.

There are more than 40 million people currently dealing with student loan debt. When their interest rates are cut, many will save hundreds of dollars a month and many more will save thousands of dollars a month. That’s money they can use to build an economic future and to strengthen the economy.”

Forgive All Student Debt

Our federal government should not be making tens of billions in profit from struggling students desperately trying to get an education. Nearly all my friends are still paying off massive college loan debt, even though most of us finished grad school at the beginning of the Clinton Administration. The previously unregulated excessive fees and grossly bloated interest rates kept increasing what was owed, and now this growing financial burden continues to hang like a collective albatross on our necks, the weight of which is draining the life blood out of so many working people.

These reforms are urgently needed, as is an economic stimulus plan to forgive all student debt. Needing to borrow money to get an education should not force anyone into indentured servitude for the rest of our lives.

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