Shaheen, Warren & Courtney Introduce Bicameral Bill To Give Student Loan Borrowers Access To Historic Low Rates Amid COVID-19
(Washington, DC) –U.S. Senators Jeanne Shaheen (D-NH) and Elizabeth Warren (D-MA) introduced the Bank on Students Coronavirus Emergency Loan Refinancing Act of 2020. The new, bicameral legislation would allow student loan borrowers to refinance their student loan debt down to the historically low federal Stafford Student Loan rates, which recently went into effect. At a fixed rate of 2.75% for undergraduate Stafford borrowers, the new rates for the upcoming 2020-2021 academic year are the lowest in sixteen years, and they reflect the unprecedented economic situation brought on by the COVID-19 pandemic. Representative Joe Courtney (D-CT) introduced companion legislation in the House of Representatives.
“Families across the country are struggling to pay the bills and buy groceries in the wake of this unprecedented health and financial crisis. The last thing they should be further burdened with is stretching already thin family budgets to cover student loan payments. Congress must continue to respond to the COVID-19 crisis and ease the economic hardships on families any way we can. That’s why I’m glad to join Senator Warren on this legislation,” said Shaheen. “With federal student loan interest rates at historic lows, this bill will allow students to refinance their student loans, just as mortgage holders and car loan holders are able to do so to pay less per month. This is a common-sense effort that could make a real difference in the lives of our students, graduates and their families – I urge members on both sides of the aisle to lend their support.”
In other sectors of the economy, mortgage holders, businesses, auto loan holders and others have been able to seek relief from the coronavirus economic fallout by refinancing their debt to similarly low rates. However, unlike other borrowers, those with existing student debt cannot access the same newly lowered rates—many older borrowers, including many millennials, who graduated from institutions of higher education ten or more years ago, are locked into rates of nearly 7%. The Bank on Students Coronavirus Emergency Loan Refinancing Act would rectify this inequity and give existing student loan borrowers the ability to refinance their debt to the same rates as new student borrowers.
Specifically, the Bank on Students Coronavirus Emergency Loan Refinancing Act would:
- Allow student loan borrowers to refinance their federal loans – all eligible federal FFEL, Direct, Perkins, and Public Health Service Act student loan borrowers could refinance their high-interest loans down to the rates offered to federal borrowers in the 2020-2021 school year. Direct loan holders would automatically have their debt refinanced.
- Allow eligible student loan borrowers to refinance their private loans into the federal program – the bill provides those with private student loan debt the option of refinancing their high-interest private student loans down to the rates offered to new federal student loan borrowers. Those who refinance will also have access to the benefits and protections of the federal student loan program.
On May 15, the U.S. Department of Education announced new interest rates for Stafford student loan borrowers for the 2020-2021 school year, and those rates have since gone into effect. The rate for Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduates is 2.75%. The rate for Direct Unsubsidized Loans for Graduate or Professional student loan borrowers is 4.30%. The rate for Direct PLUS Loans for Parents and Graduates or Professional Students is 5.30%.
Senator Shaheen has led efforts in Congress to help students manage their debt and to make college more affordable, championing legislation to increase access to higher education for Granite Staters. The Bank on Students Coronavirus Emergency Loan Refinancing Act is based on legislation introduced last year with a group of lawmakers to allow undergraduate borrowers repaying public or private loans to refinance those loans at lower interest rates, reducing monthly payments and helping borrowers repay loans sooner.
In January, Shaheen introduced legislation that would develop a central online portal to allow students to review all their public and private loans as well as repayment options in one place to help them better manage, understand and repay their debt. Shaheen introduced the bipartisan Student Protection and Success Act, legislation to curb skyrocketing student debt by increasing higher education institutions’ accountability for their students’ ability to repay their loans. Shaheen also introduced bipartisan legislation with Senators Baldwin (D-WI), Braun (R-IN) and Fischer (R-NE) to combat student debt relief scams. Shaheen worked with Senators Michael Bennet (D-CO) and former Senator Johnny Isakson (R-GA) to reintroduce legislation that would provide tax relief for AmeriCorps members who earn federal Segal Education Awards. Last May, Shaheen also joined a group of lawmakers to introduce bicameral legislation that would give hard-working Granite Staters and Americans overwhelmed by debt the option of obtaining meaningful bankruptcy relief that includes student loan debt.