Earlier this week, Sen. Al Franken backed a bill introduced by Sen. Elizabeth Warren to refinance student loan debt.
The bill, the Bank on Students Emergency Loan Refinancing Act, would allow those with student loan debt to refinance their loans in order to get the lower interest rate currently offered to new borrowers. Many students leave their secondary education with loans that have interest rates as high as seven percent. This bill would allow a refinance option with rates lower than four percent.
Minnesota has the fourth-highest rate of student debt upon completion of a four-year degree: over $30,000 per student.
On the floor of the Senate, Sen. Franken made it clear that the financial stability of graduates should not be irreparably ruined before they even begin their careers:
“This legislation will give [students] the chance to cut down their debt and keep more of their hard-earned paychecks. It will help thousands of students in Minnesota who…are doing everything they can to get that college degree. So many Minnesotans in schools across the state show tremendous perseverance and grit in getting a college education and in cobbling together the resources to pay for it. They should not end up with crushing debt and be unable to take advantage of lower interest rates to reduce that debt.”
There has been an increase in student loan debt in the United States since 2005, according to the Huffington Post.
(Source: the Huffington Post)
From 2005-2012, the average student loan debt jumped from $17,223 to $27,253: a 58 percent increase. According to FICO, the same group that developed the FICO credit score, the student lending industry–now larger than both the credit card and auto loan industries–is unsustainable.
Dr. Andrew Jennings, FICO’s chief analytics officer and head of FICO Labs, warned of the dangers of accumulated student debt:
“As more people default on their student loans, their credit ratings will drop, making it harder for them to access new credit and help grow the economy. Even people who stay current on their student loans are dealing with very large debts, which reduces the money they have available to spend elsewhere.”
Recently, Sen. Franken has been outspoken about attacking the $1.2 trillion debt students have collectively racked up in the United States. In addition to the Bank on Students Emergency Loan Refinancing Act, Sen. Franken has introduced a bill to create uniform financial aid tools for all colleges and universities in order to alleviate confusion for students about the mysteries of student loans and give them a better sense of the true cost of college. Late last year, Sen. Franken also introduced the Affordable College Textbook Act, which would allow more textbooks to be available online.