Holland Sentinel: Peters, Stabenow push for student loan refinancing
U.S. Senators Gary Peters, D-Bloomfield Hills, and Debbie Stabenow, D-Lansing, joined their colleagues in introducing the Bank on Students Emergency Loan Refinancing Act. The legislation would allow those with outstanding student loan debt to refinance at the lower interest rates offered to new federal borrowers in the 2016-2017 school year.
“Access to higher education can provide a pathway to economic opportunity, but too many young people are saddled with crushing debt after they leave school,” Peters said. “You can already refinance your mortgage or car loan, and there is no reason student loans should be treated any differently. This commonsense legislation will help reduce the burden of student and allow borrowers to keep more of their hard-earned dollars.”
Since the bill was introduced during the 113th Congress, student loan debt has grown by about $200 billion, according to a release from the Michigan Senators. In 2015, 70 percent of college seniors graduated with debt. This year, more than one in four borrowers are in delinquency or in default on their student loans. In Michigan, tuition for almost every college has more than doubled since the early 2000s.
Each student who attends a four-year college in Michigan leaves with over $29,000 in loan debt on average. According to a recent analysis, a quarter of borrowers default over the life of their loans. According to the release, it is a crisis that threatens our economy, and the futures of young people all across America. With interest rates scheduled to rise again this summer, the urgency for Congress to address the student debt crisis and to allow borrowers to access today’s lower rates is stronger than ever.
“Too many young people in Michigan who go to college are saddled with a huge student loan burden,” Stabenow said. “Our bill would allow students and parents to refinance their loans for a better rate – just like people can already do with their car or home loans. All of our students deserve an equal shot at success.”
In the Senate, Peters has focused on making higher education more affordable for Michigan students and help reduce the burden of debt. Earlier this year, Peters introduced the Making Education Affordable and Accessible Act (MEAA) to expand dual and concurrent enrollment and early/middle college programs that allow high school students to earn college credits before their high school graduation. Peters also introduced the Federal Adjustment in Reporting (FAIR) Student Credit Act, which would allow private student loan borrowers who have successfully completed a series of on-time payments to remove the student loan default from their credit report.
Senator Stabenow has championed legislation to support tuition-free community college and increased Pell grant awards for students. Her legislation to reinstate year-round Pell Grants for college students in Michigan and across the country was recently signed into law as part of the government spending bill.
Student loans have been in the news recently thanks to a focus from U.S. Secretary of Education Betsy DeVos. The Education Department said Friday that it will select one company to collect student debt payments on its behalf, rather than the nine contractors that currently handle the federal government’s $1.2 trillion portfolio of education loans.
The decision, which would take effect once the existing contracts expire in 2019, reverses years of policy implemented by the Obama administration and would revive a servicing model that had an equal number of benefits and problems.
“We can better monitor the performance of one servicer and one platform,” James Manning, acting undersecretary of education, said on a call with reporters Friday.
In April, DeVos withdrew policy memos issued by the Obama administration to strengthen consumer protections for student loan borrowers. She rescinded three memos that, among other things, called for the creation of financial incentives for targeted outreach to people at great risk of defaulting on their loans, a baseline level of service for all borrowers and a contract flexible enough to penalize servicers for poor service.
That decision drew backlash from consumer groups and state attorneys general, who complained that DeVos wasn’t following her duty to protect borrowers. At the time, DeVos said the bid process had been “subjected to a myriad of moving deadlines, changing requirements and a lack of consistent objectives.” She said the department “must promptly address not only these shortcomings, but also any other issues that may impede our ability to ensure borrowers do not experience deficiencies in service.”
