by Colleen Flaherty
Student debt is erupting—more than 70 percent of America’s students borrow money to attend college, and the average student graduates from college owning nearly $30,000. Total student loan debt currently stands at a staggering $1.2 trillion, surpassing total credit card debt.
Sen. Elizabeth Warren (D-Mass), alongside several congressional colleagues, has taken an important step to combat this growing problem.
Take Action ›
Join Elizabeth Warren in standing up for students and middle class families. Take the Degrees Not Debt Pledge today! Click here ›
“Exploding student loan debt is crushing young people and dragging down our economy,” said Senator Warren while introducing the bill. “These students didn’t go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America.”
The Bank on Students Emergency Loan Refinancing Act, introduced in the Senate by Warren yesterday, would provide relief to some 40 million Americans struggling with student loan debt.
Currently, rates for new borrowers are as low as 3.86 percent, while recent undergraduates borrowed at a rate of 7 percent. Older loans may have rates even higher than that. The bill would allow student loan borrowers with higher rates to refinance and pay the same low rate. This applies to students who took out a federal student loan before July 1, 2013, as well as private student loan borrowers in good standing.
“Allowing students to refinance their loans would put money back in the pockets of people who invested in their education,” said Warren.
In order to cover the cost of refinancing, the bill would implement the “Buffet Rule,” a minimum tax rate of 30 percent for individuals with incomes of $1 million or more to ensure the wealthiest pay their fair share to help the 99 percent of Americans affected by this growing debt.
“[Student loan debt] is stopping young people from moving out of their parents’ homes, from saving for a down payment, buying homes, buying cars, starting small businesses, saving for retirement, or making purchases that grow our economy. It doesn’t have to be this way,” said Warren.
David Tjaden, a recent University of Iowa graduate and chair of the NEA Student Program, supports Warren and her efforts when it comes to relieving the burden on the middle class.
“The refinance bill really does take the money off of Wall Street to help the average citizen,” said Tjaden, who represents over 60,000 future educators nationwide. “They’re talking about something game-changing.”
Many future educators like Tjaden are worried about what stifling student loan debt will mean for the future of the teaching profession, and what that means for America’s classrooms.
“This bill will impact young educators and those who are entering the profession right now,” said Tjaden. “Every year, educators spend money out of their own pockets for their students, for their classrooms. We ask our educators to do more and more with less and less. How can they continue to do that while carrying this massive debt? What impact will it have on students?
“We have to organize. We need to let Congress know this is an important issue that affects all of us.”