Rep. Susan Davis Cosponsors Bill to Allow Refinancing of Student Loans
Congresswoman Susan Davis (D-San Diego) became an original cosponsor of the Bank on Students Emergency Loan Refinancing Act to allow borrowers with high interest rates on their existing student loans in both the public and private markets to refinance these existing loans to lower interest rates. This would make these existing loans in line with policies available to new student loan borrowers.
“A college degree is supposed to be a pathway to the American Dream,” said Davis, a senior member of the House Committee on Education and the Workforce. “However, overwhelming student loan debt is pushing that dream out of reach for too many. Current law prevents millions of hardworking, responsible borrowers from refinancing their student loans at today’s low rates, the way that people can refinance their home and auto loans.”
Under the bill, borrowers of undergraduate student loans could refinance to an interest rate of 3.86 percent. Currently, some student loan borrowers are stuck with interest rates as high as 8 percent on their existing loans.
If enacted, over 2.3 million borrowers in California would benefit from being able to refinance their student loans at lower interest rates, according to estimates prepared by the Department of Education last year. The Department of Education also estimates that nationwide 25 million borrowers would benefit from the bill with a typical participating borrower saving $2,000 over the life of his or her loan.
Davis reintroduced a bill last week to eliminate loan origination fees which are nothing more than a hidden tax unfairly placed on young people trying to get an education. She also plans to reintroduce legislation that will require extra payments made on student loans go toward paying down the principal on the loan and not the interest.