MADISON, Wis. — U.S. Representative Mark Pocan (WI-2) today introduced legislation, H.R. 4622, to automatically lower interest rates on federal student loans to 4%. Pocan’s bill is a companion to S. 1066 by Sen. Gillibrand of New York. Under the terms of the bill, the Secretary of Education would be directed to lower all student loan interest rates to 4% and borrowers would be allowed to replace their existing debt with new loans at lower interest.
According to the latest figures, approximately 40 million Americans owe over $1.2 trillion in student loan debt, making it the second largest consumer debt in the nation, trailing only home mortgages.
In original survey research by One Wisconsin Institute, borrowers reported making an average payment of $350 a month on their student loans for nearly 19 years for an undergraduate degree. The research also found that student debt is a significant, negative drag on the economic activity of borrowers and the economy as a whole. Borrowers are significantly more likely to rent versus own their own home and buy a used versus new vehicle.
The following are the statements of One Wisconsin Now Executive Director Scot Ross on Rep. Pocan’s student loan refinancing bill:
“You can refinance a mortgage and auto loan to take advantage of lower interest rates, why not student loans?
“Rep. Pocan’s bill offers new hope and a common sense solution for millions of borrowers. Higher education ought to be a path to the middle class and not a multi-decade debt sentence.
“If big banks can borrow from the federal government at interest rates as low as 1%, why shouldn’t students and borrowers be able to lower their interest rates?
“Borrowers aren’t asking for a bailout. But they deserve a system that treats them fairly and gives them the shot at the middle class that they earned by working hard to get their education and taking on the personal responsibility of paying for it.”