MADISON, Wis. — Massachusetts Senator Elizabeth Warren today announced she has again introduced the Bank on Students Emergency Loan Refinancing Act to allow borrowers with both federal and private student loan debt to refinance their loans to take advantage of lower interest rates. Wisconsin U.S. Senator Tammy Baldwin also announced she will be sponsoring the bill. One Wisconsin Now Executive Director Scot Ross touted this common sense reform to allow the refinancing of student loans, just like you can with a mortgage, and the economic benefit it could provide for hundreds of thousands of borrowers in Wisconsin.
“Allowing for the refinancing of student loans is a common sense, pro-consumer solution to help 40 million Americans with over $1.2 trillion in debt. Borrowers have done the right thing, working hard to get an education and taking on the personal responsibility of paying for it,” said Ross. “They aren’t asking for a bailout, but they’ve earned the right to be treated fairly.”
In addition to Sen. Warren’s bill, Wisconsin Rep. Mark Pocan (WI-2) has introduced legislation to allow federal student loans to be refinanced and Rep. Ron Kind (WI-3) has called for allowing refinancing as part of his five-point plan to help students and borrowers.
According to the Consumer Financial Protection Bureau, federal student loan debt exceeds $1.2 trillion, burdening an estimated 40 million households. The Federal Reserve has found that student loan debt is now the second largest form of consumer debt in the country, more than credit cards and auto loan debt and exceeded only by home mortgage debt.
Original research by One Wisconsin Institute, conducted both nationally and in Wisconsin, found that student loan debt has a significant and negative impact on borrowers economic activity and the economy as a whole. Individuals with student loan debt are significantly more likely to rent versus own their home and purchase a used versus new vehicle.
Ross concluded, “Allowing borrowers to refinance their student loan, just like you can with a mortgage or an auto loan, is a common-sense consumer reform that will help millions of Americans. Reforms like this are desperately needed if we are to keep the $1.2 trillion student loan debt crisis from becoming a full blown economic catastrophe and to give borrowers the fair shot at the middle class they’ve earned by working hard to get an education.”