Letter to the Senate in Support of the Bank on Students Emergency Loan Refinancing Act
May 06, 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 the Bank on Students Emergency Loan Refinancing Act, introduced by Sen. Elizabeth Warren (D-MA), to give some 40 million Americans squeezed by student loan debt a fair shot at a college education and defuse a looming financial crisis. Total student loan debt now stands at $1.2 trillion and surpasses total credit card debt. 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. The Bank on Students Emergency Loan Refinancing Act would remedy these inequities by:
- Allowing students who took out loans before July 1, 2013, to refinance and pay the same low rates as those who take out loans this 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.
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 urge your support for this critical legislation.
Director, Government Relations