Rep. Peters Continues Push to Make College More Affordable for Millions of American Families
WASHINGTON, DC – October 12, 2015 – (RealEstateRama) — U.S. Congressman Scott Peters (CA-52) introduced the Federal Student Loan Refinancing Act. The bill directs the Secretary of Education to automatically lower all federal student loans to 4 percent – which is near the current 30-year mortgage rate.
Refinancing allows borrowers to replace existing debt with a new loan at a lower interest rate. This means that borrowers will reduce their monthly payments and free up income for purchases that will create a ripple effect on the economy.
“Affordable higher education for lower and middle class families has been central to the American story, including my own,” Rep. Peters said. “I would not have been able to attend college without student loans and work-study programs.
“To stay competitive in the global war for talent, we need to make it easier and more affordable for qualified students from every community to get a high-quality college education, not just students of means. Higher education is an investment in America’s economic future and in families across the country.”
Peters continued, “Students and families across San Diego would save thousands of dollars under this legislation, giving them greater flexibility when they graduate, and the ability to make purchases that they are currently putting off, including a vehicle or a home.”
Background on the Federal Student Loan Refinancing Act:
A recent New York Times Article, noting Associated Press data analysis, showed that student loan debt is hurting multiple generations in the household, not just the recent graduates. According to the study, 35% of education debt belongs to individuals over 40 – 10 percentage points higher than a decade ago.
In California, according to the Institute for College Access and Success, students owe an average of $20,340 in student loans. Furthermore, 12.4% of all California borrowers have defaulted on their Federal loans. Currently, nearly 4 million borrowers in California have outstanding Federal loans. By allowing the average borrower to refinance at 4% they would be saving $9,668.15 over the 20 year life of the loan.
As the Wall Street Journal and New York Times have noted, 40 million people are borrowers of education loans totaling $1.2 trillion, with the current national average debt at $28,400. Younger generations are making social decisions that hurt the economy because of their debt, namely delaying marriage and childbirth. Additionally, they postpone major purchases like buying a car, or opting to live with their parents instead of purchasing a home.
This trend has shown to be a huge drag on the entire state economy. By allowing the average national borrower to refinance their loans at 4%, they would be saving $8,483 over the 20 year life of the loan