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Letter to the Senate on student loan rates

September 08, 2014

Dear Senator:

On behalf of the three million members of the National Education Association and the students they serve, we urge you to vote YES on the Bank on Students Emergency Loan Refinancing Act

(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 on this bill may be included in the NEA Legislative Report Card for the 113th Congress.

Two NEA members recently shared their stories with members of Congress to help them appreciate the real-world impact of current policies. Brittany Jones told the Senate Budget Committee that to fulfill her dream of becoming a teacher, she took out $70,000 in loans she will be repaying for the next 25 years. “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 that way for the next 25 years of my life … Senators, you have the power to make sure it isn’t this way any longer. You can take actions to help make college more affordable, so all students have a fair shot at pursuing their dreams.”

Alexis Ploss is studying to become a high school physics and astronomy teacher and will be close to $100,000 in debt by the time she graduates. “I’m a low-income student,” she said. “I come from a single-parent household, and to make matters worse, my father is permanently disabled. We live on a very tight income. These numbers mean that I will struggle to support myself financially once I get out of school. They mean that I will have the constant worry of having to pay back an astronomical amount of money. Not only is this impacting me, it is impacting my father who had to take out Parent PLUS loans to pay for part of my education.”

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.

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.

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.   

Today’s students are tomorrow’s educators, doctors, nurses, engineers, and scientists—America’s next generation of innovators. NEA believes all students should have a fair shot at higher education so they can pursue their dreams. To address this issue, we recently launched a nationwide campaign, “Degrees Not Debt,” to make higher education more affordable and reduce student debt.  

We urge your support for this critical legislation to help fulfill those goals.

Sincerely,  

Mary Kusler
Director, Government Relations