Letter to the Senate on Student Loan Rates S. 2432
June 10, 2014
On behalf of the more than three million members of the National Education Association and the students they serve, we urge you to support S. 2432, which would amend the Higher Education Act to allow students who took out loans before July 1, 2013, to refinance and pay the same low rates as new borrowers. This legislation would also help defuse a looming financial crisis—total student loan debt now stands at $1.2 trillion and exceeds total credit card debt. Votes associated with this bill may be included in the NEA Legislative Report Card for the 113th Congress.
Americans deserve degrees, not debt. Under current law, rates for new borrowers are as low as 3.86 percent while rates for older borrowers are around 7 percent for recent undergraduates and even higher for older borrowers. S. 2432 would remedy these inequities by:
- Allowing students who took out loans before July 1, 2013, to refinance and pay the same rates as those who take out loans in the 2013-14 school year: 3.86 percent for undergraduate students, 5.4 percent for graduate students, and 6.4 percent for PLUS loans.
- Allowing private student loan borrowers in good standing on their loans to refinance into the federal student loan program.
- Covering the cost of refinancing federal student loans at lower rates by implementing the “Buffett Rule,” a minimum tax rate of 30 percent for individuals with incomes of $1 million or more. This approach would affect less than one percent of taxpayers and ensure that the wealthiest among us pay their fair share.
Recently, NEA student member Brittany Jones testified before the Senate Budget Committee on the impact of student loan debt in her own life. While giving her testimony Brittany remarked, “Student loan debt has been the driving force of my decisions for the last eight years of my life, and according to my current repayment plan, it is projected to be for the next 25 years of my life, well into the years for which I should be planning a retirement. It should not be that way.”
Student loan debt is not just bad for students, it harms the economy. And that can be corrected. The federal government stands to make a $66 billion profit on student loans issued from 2007 to 2012, according to the most recent Government Accountability Office projections. We believe the federal government should not be in the business of profiting off the backs of our nation’s students.
Making post-secondary education more affordable is essential for our nation’s future:
- More than 70 percent of America’s students borrow money to attend college—the average student graduates from college owing nearly $30,000.
- Working families are being crushed by student loan debt—they cannot afford to buy homes or cars, start businesses, or contribute to economic growth in other ways.
- Young borrowers are unable to keep up with their payments—30 percent of federal direct student loan dollars are in default, forbearance, or deferment.
Educators believe all students should have a fair shot at a college education so they can pursue their dreams. Today’s students are tomorrow’s educators, doctors, nurses, engineers, and scientists—the next generation of innovators who will drive our country and our economy forward. We must make the investments in education that are necessary to ensure our students can achieve these goals.
We urge your support for this critical legislation.
Director, Government Relations