With the cost of college increasing by 300 percent over the past 30 years, students have frequently had to grapple with loan debt. A bill introduced Tuesday would allow students to refinance their federal loans whenever a lower interest rate is available.
The bill—introduced by Rep. Mark Pocan, D-Wis., and co-sponsored by several other Democratic U.S. Reps.—was created as a bipartisan bill to gain support from House Republicans who have shown interest in helping student loan borrowers.
The Student Loan Refinancing Act aims to remove current refinancing constraints, permitting those with a subsidized or unsubsidized federal Stafford loan or federal direct PLUS loan to refinance any time interest rates are reduced.
This would allow students who took out undergraduate direct loans with an interest rate of, for example, 6.8 percent to now refinance their loans to use the current federal interest rate of 4.6 percent.
The goal is to create significant savings for students over the lifetime of their loan, according to Pocan.
“With college debt skyrocketing, Congress should be doing everything it can to help reduce the crushing burden of student debt,” Pocan said in a statement. “The Student Loan Refinancing Act will allow nearly 44 million Americans to refinance their student loans, just like a mortgage or car loan. This bill would bring down the long-term cost of a college degree.”
The bill comes in response to President Donald Trump administration rolling back protections for students who default on their loans. The protection, called the Federal Family Education Loan Program, kept debt collectors from charging high fees to those who had defaulted on their loans.
The act would help hundreds of thousands of borrowers in Wisconsin refinance their student loans, according to One Wisconsin Now executive director Scot Ross.
“Student loan borrowers did the right thing by working hard to pay for their technical college or university education and allowing them to refinance their loans treats them fairly in a system that’s rigged against them and gives them a shot at their piece of the American Dream,” Ross said.