For so many Spokane residents, and millions of Americans across the country, getting a college degree can be a ticket to the middle class. But today the price of admission can mean taking on a crushing amount of student loans. That’s why I am proud to support a plan in the Senate that would help ease that burden by letting borrowers refinance their debt to today’s lower rates. I was disappointed that a minority of Senators blocked our bill when we tried to bring it up for debate last week, but I am going to keep fighting to pass this bill and help borrowers and families in Spokane and across the country.
I recently heard from a Washington State University graduate named Rafael Pruneda, who is from Othello. From an early age, Rafael knew he wanted to further his education after high school. So, he studied hard and, along with his older sisters, he became part of the first generation in his family to graduate from college. But by the time he got his diploma, Rafael had more than $40,000 in student debt, with an interest rate of 6 percent. He said he will be strapped with those loans for the next 20 to 25 years.
Rafael is not alone. In 2012, 56 percent of graduates from four-year colleges and universities in our state had student debt and, on average, they will have to pay back more than $23,000, according to the Institute for College Access and Success.
All that debt can be a drag on our economy. Young Americans are typically a source of economic activity, as they set up households and start their careers. But today many find it difficult to save up for a down payment on a home or qualify for a mortgage. Paying off student debt can also prevent young people from saving for retirement or making the kinds of purchases that would further aid our fragile economic recovery. Earlier this month, I held a Senate Budget Committee hearing on the economic implications of mounting student debt. There, Rohit Chopra, an official from the Consumer Financial Protection Bureau, noted that if student debt “soaks up some of that ability to invest and save, the long-term repercussions could be real.”
To help ease the burden of student debt, I was proud to join my colleagues in co-sponsoring the Bank on Students Emergency Loan Refinancing Act. Our bill would allow borrowers to refinance their federal student loans to today’s lower rates. Right now, people can refinance their home and business loans when interest rates drop. This bill would afford borrowers – like Rafael and millions more – the same opportunity.
In fact, if Congress enacted this legislation, Rafael could save about $5,000 over 10 years. With that money, he said he’d be able to finally save up for a down payment on his first home. Across the state, more than 450,000 Washingtonians would be able to refinance their student loans, according to estimates from the U.S. Department of Education.
Not only would our bill give borrowers a fair shot, it is also fully paid for by asking the wealthiest Americans, those who can afford it most, to pay their fair share. Named after billionaire investor Warren Buffett, the “Buffett Rule” would make our tax code fairer by ensuring that millionaires and billionaires cannot use special tax breaks to pay lower effective tax rates than middle-class families.
This legislation should be a bipartisan issue – and I am hopeful that it ultimately will be. Just last year, Republicans and Democrats passed a bill allowing new borrowers to take advantage of lower interest rates. Today, we want to help Americans with existing student loans, using the same free-market principles. Unfortunately, this week, some of my Republican colleagues in the Senate put politics over middle-class families and filibustered this bill – blocking it from even being considered.
I will continue to fight for this legislation to help borrowers with their student debt. For Washingtonians, like Rafael, struggling to pay down their student debt; for young people, hoping to save up for a down payment on their first home; and for the millions of Americans who are looking to Congress to give more people a fair shot to get ahead, we can and should help lift the burden of student debt and strengthen our economy for years to come.
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