For the millions of Americans encumbered with college debt, relief was snatched away this week when Capitol Hill Republicans blocked measures that would have allowed borrowers to refinance their loans.
House and Senate Republicans on June 11 stymied progress of the Bank on Students Emergency Loan Refinancing Act, which would have allowed borrowers with college loans issued prior to 2010 to refinance at 3.86 percent—the rate established by Congress last year.
The White House, which supported the legislation, said the bill could have allowed an estimated 25 million student loan borrowers to save an average of $2,000 over the life of their loans. The measure would have been paid for by enforcing the Buffet rule—closing tax loopholes for the very rich.
“This should be a no-brainer,” President Obama said June 9 during a press conference to announce executive actions to make college more affordable. “It would be scandalous if we allowed those kinds of tax loopholes for the very, very fortunate to survive while students are having trouble just getting started in their lives.”
Sponsors of the bill said they had received bipartisan support, but Republicans seemed to balk at the means of finance.
“Today is a really good day for billionaires,” Sen. Elizabeth Warren (D-Mass.), one of the sponsors of the bill, said at a press conference after the vote. “For the more than 40 million people dealing with student loan debt it wasn’t such a good day.”
“The Republicans have said they don’t like how it being paid for—closing tax loopholes on millionaires and billionaires,” she added. “If they have an alternative plan then bring it forward. That’s what we’ve asked for.”
“We’re not giving up,” she said. “Homeowners are refinancing. Small businesses are refinancing. We just want young people who got an education to have their shot.”
The legislation was introduced amid growing public concern about the toll of student loans on the economy.
Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family’s income has barely moved. As costs rise, more students than ever are relying on loans to pay for college. Today, 71 percent of those earning a bachelor’s degree graduate with debt, which averages $29,400 per student. Outstanding student loans now total more than $1.2 trillion, surpassing total credit card debt, according to a White House report.
On June 9, President Obama signed an executive order that allows about 5 million more borrowers—those who took out loans before 2007—to cap their monthly payments at 10 percent of their incomes, among other measures intended to address the problem.
“At a time when higher education has never been more important, it’s also never been more expensive,” Obama said. “If somebody plays by the rules, they shouldn’t be punished for it.”