Portland, OR – As students and their families consider financial aid offers for the 2014-15 school year, U.S. Senator Jeff Merkley was joined today by Portland State University students in announcing his cosponsorship of legislation to help tens of millions of graduates refinance their existing federal student loans. National student loan debt is at approximately $1.2 trillion, surpassing auto loan and credit card debt. Student debt has nearly tripled since 2004, with Oregon graduates face an average debt of $24,370.
“More and more middle class families are seeing the dream of college for their children disappear because of the high cost of a college education and the mountains of debt that students have upon graduation,” said Merkley. “I’m committed to strengthening our middle class families instead of forcing Oregonians deeper into debt. This legislation would help Oregonians refinance their student loans and inject our economy with a much needed boost with the savings on interest payments. This is a common sense solution to a huge issue facing our students and middle class families.”
The legislation Senator Merkley announced today would reduce student debt on federal loans by allowing millions of graduates and borrowers currently repaying their federal student loans the ability to refinance at a lower interest rate. This legislation would impact nearly 9 in 10 federal student loans nationwide. To address the burden faced by graduates struggling to repay their federal student loans, the Federal Student Loan Refinancing Act would enable individuals who have an interest rate above 4 percent to refinance their federal loans at a lower, fixed interest rate of 4 percent.
Since a majority of federal student debt is set at an interest rate higher than 6 percent, this legislation would bring much needed relief to hundreds of thousands of Oregonians. A Center for American Progress report reveals that refinancing would increase disposable income nationwide by an estimated $14.5 billion in the first year alone. Interest rates are at historic lows, with homeowners, corporations and localities refinancing their debts. However, students and families who take out loans to pay for higher education are getting left behind in the refinancing boom. This legislation would provide these graduates with a six month window to reduce their rates on all federally-owned student loans.
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