Durbin Discusses Proposal to Lower Student Loan Interest Rate with SIU Students and Alums
[CARBONDALE] – U.S. Senator Dick Durbin (D-IL) today discussed the impact of student loan debt and college affordability with students, alumni and staff at Southern Illinois University. While America is home to the best colleges and universities in the world, tuition and fees have more than doubled over the past two decades. An estimated 1.7 million Illinoisans hold a combined $47 billion in student loan debt. Durbin has worked on a variety of proposals to make college more affordable, including a proposal to give those with outstanding student loan debt an opportunity to lower the interest rates on their loans. The Bank on Student Emergency Loan Refinancing Act was blocked in the Senate last month.
“For too many young Illinoisans, and students across the country, the opportunity for a fair shot at an affordable college education has become a long shot. They do the right thing – they go to school to get ahead but end up with so much debt that it becomes impossible for them to ever pay it back let alone get ahead,” Durbin said. “We cannot afford to stand by and do nothing while America’s next generation in sentenced to debt. The bill which I co-sponsored earlier this year would help ease that burden by allowing students to lower their interest rates. I hope some of my Republican colleagues will reconsider and vote to move forward on legislation that will give struggling students and families a fair shot at a higher education without a mountain of debt.”
Many borrowers with outstanding student loans have interest rates of nearly 7 percent or higher for undergraduate loans, while students who took out new undergraduate loans last year paid a rate of 3.86 percent under bipartisan legislation passed by Congress last summer. The Bank on Students Emergency Loan Refinancing Act would allow students and young people to pay back their outstanding loans at these same low rates, lowering payments by hundreds or thousands of dollars a year for potentially millions of borrowers. The bill would save the average borrower $2,000 over the life of their loan
The bill allows borrowers with federal FFEL loans or Direct Loans taken out prior to July 1, 2013 to refinance into the interest rates available to borrowers during the 2013-14 academic year. Those new rates are 3.86% for Undergraduate Direct Loans, 5.41% for Graduate Loans, and 6.41% for PLUS Loans taken out by a student’s parents.
The legislation would be fully paid for by enacting the Buffett Rule, which would limit special tax breaks for the wealthiest Americans that allow millionaires and billionaires to pay lower effective tax rates than middle class families.
Student loan debt has now surpassed credit card debt in America, totaling over $1 trillion. Nationally, 40 million borrowers hold a combined $1.2 trillion in student debt. The average student loan debt for Illinois students in the class of 2012 was $28,028.
Durbin has been working with Senators Elizabeth Warren (D-MA) and Jack Reed (D-RI) to build broad support in the Senate for legislative action to reduce new student loan debt and make it easier for millions of working families to manage the student loan debt they already have. In addition to the Bank of Students Emergency Refinancing Act, the three introduced the Student Loan Borrower Bill of Rights Act and the Protect Student Borrowers Act of 2013. The Student Loan Borrower Bill of Rights Act would ensure struggling student loan borrowers are treated fairly and understand the full range of repayment options and resources available to them. The Protect Student Borrowers Act of 2013 would help make institutions of higher education more accountable for student indebtedness by requiring institutions to assume some of the risk of a student loan default.
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