Durbin Cosponsors Legislation That Saves Taxpayers Billions & Rewards College Graduates Who Repay Student Loans Early

DURBIN COSPONSORS LEGISLATION THAT SAVES TAXPAYERS BILLIONS & REWARDS COLLEGE GRADUATES WHO REPAY STUDENT LOANS EARLY

U.S. Senator Dick Durbin (D-IL) and a group of five other Senators this week introduced the Student Loan Abuse Prevention (SLAP) Act, legislation that will save taxpayers $2 billion by closing a loophole in the student loan program. The bill will also give borrowers a $1,000 or 1% interest rate discount if they repay their loans in full early and provides math, science, and special education teachers with up to $23,000 in loan forgiveness.

Borrowers are currently charged 3.37% interest on student loans, but the government subsidizes certain student loans at a guaranteed 9.5% rate of return. The federal government, which is responsible for the remaining 6.13%, provides a subsidy to loan holders to cover the difference. In the first three months of this fiscal year, the federal government paid $262 million to holders of 9.5% loans, according to Education Department data.

"The 9.5% student loan loophole is not just a waste of taxpayer dollars, but it is also a wasted opportunity," Durbin said. "Instead of giving away a billion dollars a year to special interests, we should be investing that money in the education of well-deserving students in Illinois and all across the country."

The chief sponsors of the bill are U.S. Senator Ted Kennedy, ranking Democrat on the Health, Education, Labor and Pensions Committee, and U.S. Senator Patty Murray (D-WA).

http://durbin.senate.gov/record.cfm?id=238381&&