Statement of Senator Patrick Leahy (D-Vt.) On the “Bank on Students Emergency Loan Refinancing Act”
Tomorrow, the Senate will vote to proceed to a bill that I am proud to cosponsor, to allow students to refinance their student loans at lower interest rates. We must take this commonsense approach to allow those with student loans to take advantage of historically low interest rates.
It should go without saying that student loan costs should not rise so high that students cannot repay. Yet in recent years, average college tuition rates have climbed faster than inflation, far outpacing student financial aid. Since 1985, the cost of attending college has risen by 559 percent, and last school year alone, in-state tuition and fees at public four-year institutions were on average 8.3 percent higher than in the previous year.
Debt caused by student loans has surpassed the level of credit card debt in the United States. In Vermont, there are 99,000 people with federal student loans representing more than $2 billion in debt. This not only affects those borrowers and their families, but it has a devastating effect on the economy as a whole — particularly in the housing market. Student loan debt is preventing many would-be first-time home buyers from saving enough to afford a down payment. High student loan debt, combined with the housing lending climate, has left many unable to secure a mortgage. Experts are worried that the high level of student loan debt is one of the reasons the housing market has been slow to recover.
This bill would help those suffering with the burden of student loan debt by offering them the opportunity to refinance at lower interest rates. We offer refinancing options to businesses, homeowners, and even local governments. These options should be available to students, too. The legislation would help roughly 25 million borrowers keep up with their student loan payments by allowing them to refinance at the same rates that new borrowers receive. Combined with the Executive Action announced this week by President Obama to give more students the ability to cap monthly payments, this bill is an important step toward relieving the student debt burden so many Americans face.
I regularly hear from Vermonters about their struggles to afford a college education, and their concerns about student loan debt after they graduate. Many students are forced to take on significant debt, and too often are not able to complete college because of soaring costs. For those students who do go on to graduate, record student loan debt has made getting ahead in today’s job market an insurmountable challenge for some students. Students who might otherwise choose to work in the public sector, or other historically lower paying jobs like primary health care or teaching professions, must make professional choices based solely on their level of debt. Unfortunately, along with the pressure from student loan debt has come an increase in default rates among borrowers, which will affect a student’s financial stability for decades.
I have always firmly believed in the importance of a college education. I was the first Leahy in my family to graduate from college. Every young person should have the chance to pursue higher education. Education is a path out of poverty, a road to personal growth, and an access ramp to professional accomplishment and economic security. Everyone wins when access to education expands.
Each opportunity for a young American to earn a college education is also an opportunity for the Nation’s future. Our country’s ability to compete in the global marketplace in the future depends on our children’s ability to finance their education. This does not need to be a partisan issue and should be one where we can find widespread agreement.
I urge every Senator to help us move ahead to support our students, their futures, and our country’s future. This issue deserves to be debated in the Senate.
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David Carle: 202-224-3693
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