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WPCNR CAPITOL WIRE. From NY Senator Kirsten Gillebrand. May 13, 2014:
With New York graduates saddled with student loan debt, U.S. Senator Kirsten Gillibrand, joined by Anne Johnson from Generation Progress, will hold a conference call TODAY, Tuesday, May 12 at 12:30PM on legislation she is pushing to help tens of millions of graduates refinance their federal student loans.
National student loan debt is at approximately $1.2 trillion, surpassing auto loan and credit card debt, and New Yorkers face sky-high student debt at an average of more than $27,000 per graduate.
Senator Gillibrand’s legislation would reduce student debt on federal loans by allowing millions of graduates and borrowers currently repaying their federal student loans the ability to refinance at a lower interest rate.
Senator Gillibrand’s proposal to allow graduates to refinance their loans at a lower interest rate just like businesses and homeowners are doing on a daily basis was included in the Bank on Students Emergency Loan Refinancing Act legislation introduced by Senator Elizabeth Warren last week.
“While a higher education remains the clearest path into the middle class, more of our graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before,” said Senator Gillibrand. “This high amount of student debt is dragging down our economy, stopping graduates from buying homes and cars, or starting businesses and families. The solution is right in front us- our graduates should be able to refinance their debt in the same way that our businesses and homeowners do. This will help to strengthen our middle class families instead of forcing us deeper into debt. When we price young people out of a college education we all pay a price. We can’t afford any more delay.”
“Student debt is taking a toll on our economy, and borrowers are struggling to get by,” said Anne Johnson, Executive Director of Generation Progress. “The ability to refinance student loans would give borrowers a fair shot in this economy. As we saw last year, lowering interest rates is a bipartisan policy, and borrowers would save billions in interest payments each year. Student loan borrowers should be able to refinance their loans—just like homeowners, corporations, and even state and local governments.”
“The cost of a college education in New York State has been on the rise for years now,” said Queens College student and NYPIRG Chairperson Aileen Sheil. “Unfortunately, skyrocketing tuition also means skyrocketing student loan debt. Senator Gillibrand’s refinance initiative will go a long way to help ease the financial burden of those with student debt.”
Graduates are facing a tougher time repaying their college loans as student debt nearly tripled since 2004, with New York graduates facing an average debt of $27,310 in 2012, according to the Federal Reserve Bank of New York. Over the past several years, more young borrowers have fallen further behind on their student loan payments.
Nationwide, almost 12 percent of all student debt was delinquent by the end of last year, up from 7.6 percent in 2008, according to the Federal Reserve Bank of New York.
Statewide, nearly 11 percent of New York graduates, or 24,800 borrowers, defaulted on their student loans between 2009 and 2012, or were more than nine months behind on their payments, per the Department of Education. Senator Gillibrand is pushing for legislation that will help provide relief to graduates currently in repayment.
In New York City, an estimated 11.5% of student loan holders have balances 90+ days delinquent, and 1.46 million residents aged 18-34, or 64% have some sort of post high school education.
In Western New York, an estimated 12.8% of student loan holders have balances 90+ days delinquent, and over 200,000 residents aged 18-34, or 59% have some sort of post high school education.
In the Rochester-Finger Lakes Region, an estimated 10.7 % of student loan holders have balances 90+ days delinquent, and over 240,000 residents aged 18-34, or 62% have some sort of post high school education.
In Central New York, an estimated 8.1% of student loan holders have balances 90+ days delinquent, and over 160,000 residents aged 18-34, or 62% have some sort of post high school education.
In the Southern Tier, an estimated 16.3% of student loan holders have balances 90+ days delinquent, and nearly 70,000 residents aged 18-34, or 54% have some sort of post high school education.
In the Capital Region, an estimated 9.6% of student loan holders have balances 90+ days delinquent, and over 160,000 residents aged 18-34, or 57% have some sort of post high school education.
In the North Country, an estimated 8% of student loan holders have balances 90+ days delinquent, and over 52,000 residents aged 18-34, or 52% have some sort of post high school education.
In the Hudson Valley, an estimated 7.3% of student loan holders have balances 90+ days delinquent, and over 260,000 residents aged 18-34, or 61% have some sort of post high school education.
On Long Island, an estimated 8.1% of student loan holders have balances 90+ days delinquent, and over 365,000 residents aged 18-34, or 67% have some sort of post high school education.
To address the burden faced by graduates struggling to repay their federal student loans, Senator Kirsten Gillibrand joined 15 of her colleagues in pushing for passage of the Bank on Students Emergency Loan Refinancing Act, which includes Gillibrand’s proposal to allow those with outstanding federal student loan debt to refinance at lower interest rates.
Many borrowers with outstanding student loans have interest rates of nearly 7 percent or higher for undergraduate loans, while students taking out new undergraduate loans pay a rate of 3.86 percent under the Bipartisan Student Loan Certainty Act passed by Congress last summer.
According to a Congressional Budget Office report, the federal government makes 36 cents in profit on every student-loan dollar it puts out, and estimates that student loans will bring in $34 billion this year alone.
A Center for American Progress report reveals that refinancing just federal loans, to 4 percent, would increase disposable income nationwide by an estimated $14.5 billion in the first year alone. Interest rates are at historic lows, with homeowners, corporations and localities refinancing their debts. However, students and families who take out loans to pay for higher education are getting left behind in the refinancing boom. Senator Gillibrand’s legislation would provide these graduates with a six month window to reduce their rates on all federally-owned student loans.
The legislation is co-sponsored by Senators Barbara Boxer (D-CA), Richard Durbin (D-IL), Jack Reed (D-RI), Mary Landrieu (D-LA), Debbie Stabenow (D-MI), Tom Udall (D-NM), Jeanne Shaheen (D-NH), Mark Begich (D-AK), Al Franken (D-MN), Richard Blumenthal (D-CT), Brian Schatz (D-HI), Tammy Baldwin (D-WI), Mazie Hirono (D-HI), Ed Markey (D-MA), and Cory Booker (D-MA). A companion bill is being introduced today in the U.S. House of Representatives by Representatives John Tierney (D-Mass.) and George Miller (D-Calif.), the senior Democrat on the House Committee on Education and the Workforce.
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