Student Loan Debt Direct Refinancing Proposed

Student loan balloons! - student loan debtAccording to the Federal Reserve, as of 2013 U.S. debt holders owe a total of $1.3 TRILLION in student loan debt – vastly more than what is owed on auto loans and credit cards and surpassed only by mortgage debt. Holders of consumer debt and mortgages have a leg up on student loan debt holders since they can easily refinance their debt to potentially lower interest rates.

A total of 30% of all student loan debt is currently in deferral, default or forbearance, indicating that a significant number of individuals with student loan debt are having a hard time making payments and affording their daily living expenses. In fact, people age 60 and older who should be thinking about retirement owe more than $36 billion in student loan debt. This debt is dragging the economy downward since individuals who would normally move out of their parents’ homes and begin life on their own are now saddled with debt that has made them slow down their spending in other areas.

If you think that these individuals can just file for bankruptcy and have their debt wiped out, think again. Student loan debt will follow you to the grave and will most likely reach out to your estate for recovery once you have already passed on.

Massachusetts Senator Elizabeth Warren has introduced the Bank on Students Emergency Loan Refinancing Act that would allow student loan debt holders to refinance their government held debt to lower interest rates that might lower monthly payments enough to make a difference in millions of people’s lives. I’m not a fan of the entirety of the bill, however, I am a fan of anyone who is willing to do SOMETHING to address student loan debt and its effect on millions of individuals.

If you have a few minutes, listen to a portion of Senator Warren’s speech on student loan debt as she introduced the proposed bill on May 6, 2014.

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6 thoughts on “Student Loan Debt Direct Refinancing Proposed

  • It would be nice to allow students to refinance their government student loans directly. I was able to refinance my private student loans, but if I went to refinance the government ones I would lose the additional protections.

    Especially now that the interest rates for the loans are tied to market rates, being that your freshman year loans might have a terrible interest rate while your senior year might not. Being able to take advantage of the current market rates and get them all down low would save the person a few hundred dollars!

  • I find American student loans crazy. They are so high! . In the UK, our government student loans are not repayable until we earn at least £16k, it is paid on a percentage basis so someone on £16k will find their monthly repayment less than someone on £40k. The monthly repayment is deducted from your salary as a tax but you have the option of making extra payments if you wish.

    Interest is currently only 1.5% (based on inflation) and if you are unemployed, or could never work again, you don’t have to make monthly repayments (but interest will still accrue). It is also written off after 25 years.

  • Student Loan Debt is a serious matter. Its best for individuals facing such debt to really make a plan to beat it and follow through. Letting it go, or relying on the idea of bankruptcy is not viable.

  • College education should be absolutely free. 8% student loans? The gov’t really IS the PAYDAY loan company of America. How much did we waste on Afganistan – $8 billion or $8 trillion? We could have applied that $8 trillion to free college education. Ya think?

  • The colleges are running a scam. Where else can any business get guaranteed money and stick the bill to someone else?

    If you are going to college, go to state U. Better yet, learn a trade where u can make money.

    If i had it to do over again, I don’t go to college and I definitely don’t go to grad school.

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