Quad City Times - Durbin Pushes College Loan Breaks

News Article

By Ed Tibbetts

U.S. Sen. Dick Durbin was in the Quad-Cities on Friday to push for a bill to allow people with college loans the option of refinancing their debt at a far lower rate.

The bill, which was introduced by Sen. Elizabeth Warren, D-Mass., would let those with undergraduate loans cut their rates to 3.86 percent, the same as the rate students taking out similar loans for this school year paid. Currently, many existing loans carry a 7 percent interest rate and in some cases more.

The student loan plan is part of the Senate Democrats' election-year "fair shot" agenda, which includes a proposal to raise the minimum wage. The loan measure could come to the Senate floor sometime next month.

"We want to make sure that students from lower income, middle income and working families have a fair shot at the higher education that they can afford," said Durbin, an Illinois Democrat and co-sponsor of the bill. "We want the college experience to be an enrichment for their lives and not shackle them to a debt, which is going to drag them down for decades to come."

The bill not only allows debt-holders to refinance their current government loans but it essentially would allow private debt to be exchanged for government loans at a lower interest rate.

Student loan debt is a major concern in the United States. In Illinois, the average student loan debt for the class of 2012 exceeded $28,000. In Iowa, it was $29,456, according to the Institute for College Access & Success.

In addition to the lower rates for loans aimed at financing undergraduate educations, new rates of 5.41 percent for graduate student loans would be set, along with 6.41 percent for PLUS loans, which are taken out by the parents of students.

A 26-year-old Rock Island man who spoke at the conference says he has $80,000 in debt, and that he's already paid down $30,000, a third of it interest costs.

"I'm working against the monster of compound interest," said Joshua Schipp, who said he grew up in financial straits.

Some analysts have given the Warren bill little chance of passage. Democrats say they want to pay for it by imposing the Buffett Rule, which ensures that households with incomes of more than $2 million a year pay a 30 percent tax.

The Buffett Rule has drawn Republican criticism. But at a dining hall full of students at Augustana College at midday Friday, Durbin urged the young people to get involved in the upcoming election, if they believed in the plan.

"Otherwise it's going to be a struggle," he said.

In addition to objections over taxes, critics of the legislation have said students already get significant subsidies on their government loans. They've also said that private lenders will be hurt by having their loans exchanged.

Others have said the government ought to put more emphasis on expanding use of existing laws that allow for lower loan repayment schedules and even debt forgiveness.

A similar bill to Warren's has been introduced in the House. Rep. Cheri Bustos, D-Ill., announced Friday that she is a co-sponsor of the legislation, which is being introduced by Rep. George Miller, D-Calif., and Rep. John Tierney, D-Mass.

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