Earlier this summer, the Senate voted on Senator Elizabeth Warren’s (D-MA) Bank on Students Emergency Loan Refinancing Act (S.2432). Although the bill failed to reach cloture (vote was 56-38), it was an important step toward alleviating the more than $1.2 trillion of debt carried by 40 million Americans [Congressional Budget Office]. The bill received bipartisan support, and Democrats have stated their commitment to reintroduce the bill later this year [Politico].

The Bank on Students Emergency Loan Refinancing Act would:

Allow all eligible federal student loan borrowers to refinance their loans down to interest rates offered to new 2013-2014 borrowers (see chart below).

Allow eligible borrowers to refinance high-interest private loans into federal programs in order to take advantage of lower federal rates, as well as benefits and protections offered by the federal student loan program. About 10 percent of borrowers hold private loans eligible for refinancing. [Washington Post] Allow an estimated 25 million student loan borrowers to refinance their student loans at lower interest rates, saving the typical borrower $2,000 over the life of his or her loan. [The Domestic Policy Council & The Council of Economic Advisors] Pay for refinancing by implementing the Buffet Rule to close tax loopholes for millionaires and billionaires. Reduce the deficit by about $14 billion during the 2015-2024 period. [Congressional Budget Office]



Bank on Students would refinance loans down to the 2013-2014 direct loan rates:

Direct Subsidized Loans (Undergraduates): 3.86 percent interest rate

Direct Unsubsidized Loans (Undergraduates): 3.86 percent interest rate

Direct Unsubsidized Loans (Graduate or Professional Students): 5.41 percent interest rate

Direct PLUS Loans (Parents and Graduate or Professional Students): 6.41 percent interest rate

[Federal Student Aid]

More than $1.2 trillion in student loans are hurting borrowers and the economy.

In 2012, average student debt upon graduation was $29,400. [The Project on Student Debt]

70 percent of recent graduates have student loan debt. [The Project on Student Debt]

Student loan debt is only second in size to mortgage debt. [Generation Progress]

Refinancing loans above five percent would have saved borrowers $14 billion in 2013, money that could have been reinvested in other sectors of the economy, or used to invest in homes, cars, or small businesses. [Center for American Progress]

The majority of federal student debt is at rates above six percent, yet other types of federal debt have rates below two percent. [Center for American Progress]

More Millennials cite student loan debt a major concern than any other form of debt, and only 40 percent believe they got a good value on their education. [Fusion]

The following Senators voted YES for Warren’s bill on June 10, 2014: