As Interest Rates Drop for New Student Loans, Garamendi Highlights Need for Refinancing Options
WASHINGTON, D.C. – Today, as new, lower interest rates were announced for student loans for the 2015-2016 school year, Congressman John Garamendi (D-Fairfield, CA) called on House Republican leaders to schedule a vote on H.R. 1434, the Bank on Students Emergency Loan Refinancing Act.
“Student loans are the second largest source of consumer debt – ahead of even credit cards. This debt is an albatross around the necks of Americans striving to advance in their careers and to support their families, and it holds our economy back,” Congressman Garamendi said.
“Americans working in good faith to repay their student loans deserve access to the same lower interest rates as current students,” Garamendi added. “A college education should be an investment into the future, not a ball-and-chain from the past. It’s time for Congress to vote on the Bank on Students Emergency Loan Refinancing Act.”
Congressman Garamendi is a cosponsor of this bill, which was introduced in the Senate by Senator Elizabeth Warren (D-MA) and in the House by Congressman Joe Courtney (D-CT-2). H.R. 1434 would allow borrowers with high interest rates on their existing student loans in both the public and private markets to refinance these existing loans to lower interest rates. The bill would allow undergraduate student loans to be refinanced at an interest rate of 3.86 percent. Currently, some borrowers are paying interest rates as high as 7 percent on their existing loans. The bill would help an estimated 25,029,000 Americans, including 2,328,000 Californians.
The lower student interest loan rate for new college loans was first established as a cost-saving mechanism within the Student Aid and Fiscal Responsibility Act (which became law with the Affordable Care Act) by eliminating the for-profit private loan middlemen that extracted a usury from every private college loan. The lower interest rate was maintained under an executive order and through the bipartisan Student Loan Certainty Act in 2013, but more than 25,000,000 existing borrowers fell through the cracks of these reforms. The Bank on Students Emergency Loan Refinancing Act creates a fairer system for all borrowers while retaining lower interest rates for current students.
As a University of California Regent and California State University Trustee from 2007-2009, then-Lieutenant Governor Garamendi voted against every undergraduate tuition fee increase. He believes an affordable higher education system is one of the principle foundations of a growth-oriented economy that builds the middle class.