A Wisconsin lawmaker, U.S. Representative Mark Pocan, wants federal student loan borrowers to be able to refinance their debt whenever interest rates fall. To that end, he introduced bipartisan legislation calling for the implementation for federal student loan refinancing according to his own press release.
Currently, private banks and lenders are the only option to refinance student loans. While it’s available in the private sector, current underwriting criteria and eligibility requirements often make it hard for student borrowers to qualify for the lowest rates, making it hard to get the right deal.
Likening it to refinancing a mortgage or a car loan, Rep. Mark Pocan, the Democrat from Wisconsin’s second congressional district, introduced the Student Loan Refinancing Act earlier this week. H.R. 1614 would enable student loan borrowers with federal loans to refinance to a lower interest rate even if the loans are fixed for a set period of time.
“The Student Loan Refinancing Act will allow nearly 44 million Americans to refinance their student loans… This bill would bring down the long-term cost of a college degree,” said Rep. Pocan in the press release announcing his bipartisan bill.
The new piece of “bipartisan” legislation is cosponsored by a slew of Democratic lawmakers, but it isn’t being supported by as many Republicans as Mark Pocan is letting on. Out of 33 additional cosponsors to the bill, only two of these politicians, Rep. Glen Grothman (R-WI-6) and Rep. John Katko (R-NY-24), are with the Republican party. This isn’t too surprising given what LendEDU found in its congressional report. Democrats are much more likely to support the federal student loan refinancing initiative than their Republican counterparts.
Despite the apparent lack of bipartisan support, others are hopeful. The bill “provides immediate financial relief to millions of students and families, freeing them from unnecessarily burdensome debt, and makes it clear that student loans should help further students’ lives, not hold them back,” said Randi Weingarten, president of the American Federation of Teachers, in the same press release.
She also noted that the budget proposal from President Trump calls for “curtailing” student aid programs, making the bill “more urgent than ever.” While President Trump is keeping the Pell Grant program under his budget proposal, the funding for the Pell Grant program would get slashed by $3.9 billion into 2018. The budget also calls for the elimination of the Federal Supplemental Educational Opportunity Grant (FSEOG) program which gives students with a financial need grants of $100 to $4,000 a year.
These developments would theoretically increase the demand for student loans, but it would also theoretically reduce the federal deficit down the road, exchanging free aid for aid that requires repayment. However, this may not do much to stem the rise in college tuition aside from discouraging some ineligible FAFSA applicants from attending college.
Author: Andrew Rombach
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