Congressman Garamendi Unveils Student Loan Refinancing Bill on UC Davis Campus
DAVIS, CA – Congressman John Garamendi (D-Fairfield, Davis, Yuba City, CA), a former UC Regent and CSU Trustee, today unveiled his new student loan refinancing bill at UC Davis’s Student Community Center. Joined by students and faculty concerned about growing student loan debt, Garamendi explained why Congress should support his Student Loan Refinancing and Recalculating Act.
“Congress has improved student loan refinancing since I entered Congress, but tuition throughout America continues to skyrocket,” Congressman Garamendi said. “1 in 7 borrowers default on federal student loans within three years of beginning repayment. We know that 30% of Federal Direct student loan dollars are in default, forbearance, or deferment, and at least 40 million Americans are burdened by student loan debt. Congress can and should do more. The Student Loan Refinancing and Recalculating Act would save millions of students and parents thousands of dollars as they prepare for the future.”
The Student Loan Refinancing and Recalculating Act of 2016 is focused on the four R’s. It:
• Refinances existing student loans to a lower interest rate
• Recalculates new student loans at a lower interest rate
• Reduces the debt burden for students; and
• Reinvests in our society and economy by freeing up the financial resources of borrowers
Garamendi was joined at the press conference by Alex Lee, President of the Associated Student of the University of California Davis (ASUCD), Jacqui Barkoski, External Chair of the Graduate Student Association, Joyce Cleaver, Financial Aid Information Manager for UC Davis, and Robert Davis, Associate Director of UC Davis’s Financial Aid and Scholarships Department’s Student Experience, Processing and Awards Office.
“Graduate student loan debt is a financial barrier that prevents highly qualified individuals from accessing graduate school,” said Jacqui Barkoski with the Graduate Student Association. “This debt burden limits our ability to work in the public sector and also delays big ticket purchases (ie: homes, cars). The cost of a graduate education can delay completion of a graduate degree. This financial burden affects graduate student well-being including reports of depression, and difficulty paying for basic needs like food and housing.”
The bill refinances student loan interest rates to the current 10 year Treasury note rate, plus 1%. This means that the current interest rate of 4.29% for undergraduate borrowers, 5.84% for graduate borrowers, and 6.84% for parent and graduate PLUS loan borrowers would all be lowered to 3.23%.
In practical terms, this means an undergraduate student with average student loan debt ($35,051) would save $2,760 over the lifetime of their loan; a graduate student with average student loan debt ($57,600) would save $3,480 over the lifetime of their loan.
The bill also ensures that borrowers with an expected family contribution of less than, or equal to, $10,000 will not accrue interest on their student loans while they are in school.
While Lieutenant Governor, serving as a University of California Regent and California State University Trustee, Garamendi voted against every undergraduate tuition increase. Since entering Congress, he has supported multiple bills to lower student loan interest rates, accelerate loan forgiveness for students pursuing in demand public service careers, and increase access and funding levels for Pell Grants and Stafford and Perkins loans.