U.S. Senate Democrats offer student debt refinance bill

WASHINGTON Wed May 14, 2014 4:20pm EDT

Senator Elizabeth Warren (D-MA) questions U.S. Federal Reserve Vice Chair Janet Yellen (not pictured) during a Senate Banking Committee confirmation hearing on Yellen's nomination to be the next chairman of the Federal Reserve, on Capitol Hill in Washington November 14, 2013. REUTERS/Joshua Roberts

Senator Elizabeth Warren (D-MA) questions U.S. Federal Reserve Vice Chair Janet Yellen (not pictured) during a Senate Banking Committee confirmation hearing on Yellen's nomination to be the next chairman of the Federal Reserve, on Capitol Hill in Washington November 14, 2013.

Credit: Reuters/Joshua Roberts

WASHINGTON (Reuters) - U.S. Senate Democrats unveiled legislation on Wednesday to allow millions of Americans with student loan debt to refinance at lower interest rates.

Democrats said their measure would let holders of both federal and private undergraduate loans - some with rates of 9 percent or higher - to refinance at 3.86 percent.

Drafted in coordination with the White House, the bill is part of Senate Democrats' 2014 legislative agenda aimed at giving all Americans "a fair shot" and rallying the party's liberal base in advance of the November elections.

But like earlier rejected measures to raise the minimum wage and renew expired long-term jobless benefits for millions of Americans, it faces Republican opposition that could kill it.

"This bill would be hugely expensive," said Republican Senator Jeff Flake of Arizona. "I don't think it will be seriously considered."

Democrats control the Senate, 55-45, but need 60 votes to clear Republican procedural hurdles.

Democratic Senator Elizabeth Warren, a chief sponsor of the bill, said she expected bipartisan support.

"Student loan debt is a real and growing crisis that is crushing young people and dragging down our economy," Warren said.

"When interest rates are low, homeowners, businesses and even municipalities refinance their debt. But right now the government doesn't offer a refinancing option to students," she noted. "Allowing students to refinance their loans would help give them a fair shot at an affordable education."

Last year, Congress approved the Bipartisan Student Loan Certainty Act of 2013, which set the undergraduate student loan interest rate at 3.86 percent for the current school year.

Democrats said the nonpartisan Congressional Budget Office will determine the cost of their bill, which would permanently let student-loan borrowers refinance at the going rate.

Democrats propose that the cost of their bill be offset by reducing tax breaks for millionaires.

Democrats cited federal data showing that student-loan debt grew by $31 billion from January to March, to total $1.1 trillion, making it the fastest-growing household debt category.

Overall, about 40 million Americans have student loan debt, Democrats said.

(Reporting by Thomas Ferraro; Editing by Dan Grebler and Eric Walsh)

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Comments (9)
rlm328 wrote:
I am truly sorry that politicians keep encouraging people to go out and start their lives out deep on debt to obtain a degree in a field that may never pay for itself. Since the gov’t has started offering gov’t back loans colleges have raised tuition at a rate higher than inflation as a result the students are getting the short end of the stick.

If the gov’t really wants to help students, then before it gives them a loan have them sit down with a financial advisor paid for by the gov’t. Have the advisor show them what the degree they want will cost, what their degree is worth in the market place salary wise and how long it will take to pay back their loan with the degree they desire.

While a lot of degrees are interesting there is not a lot of demand for them so going in debt to the tune of $100k or more for a degree that will only a salary marginally higher than a HS diploma does not make much sense.

May 14, 2014 4:04pm EDT  --  Report as abuse
moebius22 wrote:
Now the Democrats are trying to buy the votes of students. Wait till the taxpayers find out they’re on the hook for the lost money.

May 14, 2014 4:29pm EDT  --  Report as abuse
USARealist wrote:
rlm328 is spot on. It’s election time, and the Democrats need the “deadbeat” vote to help keep the Senate.

May 14, 2014 5:22pm EDT  --  Report as abuse
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