WASHINGTON, D.C. – In the wake of President Obama’s executive order on student loans, Democratic senators rallied support for a student debt refinancing bill that will be up for a vote in the U.S. Senate today.
The bill would allow students to refinance existing student loans at lower interest rates of 3.86 percent for undergraduates and 5.41 percent for graduate students.
Sen. Mark Udall, D-Colo., a co-sponsor of the bill, said it could help more than 760,000 Coloradans carrying federal student loan debt.
“The price tag on a quality education is rising faster than ever, and far too many college graduates are weighed down by a mountain of debt,” Udall said.
The United States has $1 trillion in outstanding student loan debt. In Colorado, graduates in 2012 had an average of $24,000 in student debt, according to the Project on Student Debt, which works to increase public understanding of higher education debt.
College students stood behind the senators and five stacks of more than 300,000 signatures supporting the measure. The bill couples with the president’s executive order Monday that eventually will allow more Americans to limit their student loan payments at 10 percent of their income and forgive student loan debt after 20 years.
The bill would be paid for through the “Buffet Rule,” named after millionaire Warren Buffett, which would ensure a higher tax rate for households making more than $1 million.
Republicans say the bill does not tackle bigger problems in higher education.
“This bill doesn’t make college more affordable, reduce the amount of money students will have to borrow or do anything about the lack of jobs graduates face in the Obama economy,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.
Congress passed bipartisan legislation in 2013 that lowered the federal student loan interest rate to 3.86 percent for new student loans. Democrats said the Bank on Students Emergency Loan Refinancing Act would expand the low-interest rate so those with student loans taken out before 2013 can be refinanced.
Outstanding student debt and interest rates sometimes as high as 14 percent are dragging down the economy, said Sen. Elizabeth Warren, D-Mass., who introduced the legislation in May.
“Young people are not able to buy homes, start a small business or buy cars. They can’t make the economic decisions that move their lives forward and the economy forward,” she said.
While the bill is not expected to pass the Senate, Sen. Chuck Schumer, D-N.Y., said Democrats would bring the measure up again.
mbowerman@durangoherald.com. Mary Bowerman is a graduate student at American University in Washington, D.C., and an intern for The Durango Herald.
