Yesterday Sen. Sherrod Brown (D-OH) unveiled a plan that would allow student debt holders to refinance their private student loans, giving them the opportunity to benefit from today’s extraordinarily low interest rates.
“Why should our students and graduates be the last to benefit from historically low interest rates?" Sen. Brown said. "Helping graduates refinance their private student loan debt into more affordable terms frees up funds for them to buy houses, start businesses, or contribute to their communities. It makes sense for our students and graduates and it makes sense for our economy.”
That sentiment is evident in Brown’s Refinancing Education Funding to Invest (REFI) for the Future Act. According to Sen. Brown’s website, the act will allow private student loan borrowers to take advantage of today’s low interest rates, and will make certain that rates are more appropriate to a borrower's credit risk. This will allow borrowers to pursue activities that spur economic growth like buying a home or starting a small business.
How exactly would his plan accomplish this task? Brown and the bill’s co-sponsors suggest that the answer is commonsensical. The REFI for the Future Act would authorize the Department of the Treasury to find inventive solutions to mitigate and potentially eliminate inefficiencies in the private student loan market. Additionally, it would set the terms of the bill to expire no later than five years after passage and require regular reporting and oversight. Brown’s plan would ultimately encourage competition and invigorate a stagnant private student loan refinancing market.
Brown received support from several of his Democratic colleagues in the Senate, particularly from the bill's main co-sponsor, Sen. Heidi Heitkamp (D-ND). Brown and Heitkamp were also joined by Sens. Dick Durbin (D-IL) and Patty Murray (D-WA).
Speaking to her role in drafting the REFI for the Future Act, Sen. Heitkap said, “I have heard from countless students who are trapped because of an overwhelming amount of private student loan debt. This does not only impact them, it is a drain on our entire economy. The bill I wrote will incentivize refinancing, allowing students to benefit from incredibly low interest rates.”
With student debt now topping $1 trillion and interest rates projected to range anywhere from 13 to 20 percent for some private student loans in the near future, the REFI for the Future Act could not come at a more appropriate time. Thousands of current students and post graduates will enter into a slowly recovering economy, and this may be part of the boost they need.Sen. Sherrod Brown Unveils Plan to Refinance Private Student Loans »