Student debt in the United States exceeds $ 1.7 trillion as growing numbers of borrowers find themselves unable to repay their loans due to job shortages and other extraordinary financial circumstances caused by the health crisis and economic impact of COVID-19.
Legislation of the American Senses Mark R. Warner (D-VA), Jon Tester (D-MT) and Angus King (I-ME) would allow borrowers to better manage their student debt during the COVID-19 crisis and beyond .
The Coronavirus Emergency Student Loan Refinancing Act, 2021 would ease the burden of the student debt crisis by:
- Allow student loan borrowers to refinance their federal student loans as long as they are in good standing and meet eligibility criteria based on income or debt-to-income ratio established by the Department of Education. Under the legislation, borrowers could apply to refinance their direct loan or Federal Family Education Loan (FFEL).
- Give borrowers the option to refinance their federal student loans at interest rates lower than the lowest 10-year Treasury bill yield in the previous six months, plus a fixed percentage rate set by the 2013 Law on the certainty of student loans.
- For undergraduate borrowers with Federal Direct Stafford, Unsubsidized, PLUS, and Consolidated loans, the interest rate would be equal to the lowest yield on the 10-year US Treasury bill in the previous six months plus 2.05 %.
- For graduate borrowers with Federal Direct Stafford or unsubsidized loans, the interest rate would be equal to the lowest yield on the 10-year US Treasury bill in the previous six months, plus 3.6%.
- For borrowers with PLUS loans, the new interest rate would be equal to the lowest yield on the 10-year US Treasury bill in the previous six months plus 4.6%.
“Across the country, we have young people who have made an important decision to invest in their future, but now find themselves struggling with crushing student loan debt during a pandemic that has ravaged the economy and shattered the market. work, ”Warner said. “The way to get our economy back on track is not to have a whole generation of people unwilling or unable to make future financial commitments because they are buried by the loans they have taken out. in their late teens or early twenties. This law will give student borrowers a real chance to pay off their debt so that they can invest in a home, start a business or save for retirement in the near future.
“Young people across our country are facing unprecedented financial hardship simply because they have chosen to invest in their future,” Tester said. “They are the current and future leaders of our communities and it is essential that they have financial security so that they can make investments and purchases to move our economy forward and help America recover from this crisis. This bill will give student borrowers more opportunities to repay their loans so that they are better able to participate in their local economies without fear of going into debt.
“The coronavirus pandemic has hit our economy hard – and it’s a major problem for the millions of Americans who have taken out student loans to invest in their future,” King said. “As the economic fallout from the coronavirus pandemic continues to unfold, Congress must take action to help these young people have additional flexibility and options to meet these obligations. Our legislation provides avenues to help bring this debt under control – if enacted, it can improve the financial prospects of these borrowers while supporting the overall health of the US economy. “
This legislation is supported by a number of organizations, including the Disability Rights Education & Defense Fund, the Center for Law and Social Policy, the National Association of Realtors and the Georgetown University Center on Education and the Workforce:
“Loans prevent people from going to college, loans force students to specialize in lucrative subjects rather than following their true professional interests and values, and loans force people to postpone decisions such as buying houses and forming families, which hurts us all. We are fortunate that Senator Warner recognizes this and has stepped up to address it, ”said Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce.
“High student debt deters families and individuals from pursuing the American dream of homeownership, and its impact has been particularly strong on minority and millennial households. In fact, a 2020 NAR report found that student loan costs have been the single most important factor hindering Americans’ ability to save for a down payment over the past five years. Realtors® commends Senator Warner for advancing the critical national conversation regarding the impact of student debt on the broader US economy, and we look forward to working with him to advance this legislation in Congress, ”he said. said Charlie Oppler, president of the National Association of Realtors.