Yale University no longer expects undergraduates to borrow money as part of their financial aid packages. But across the country, college students are graduating with mountains of debt—and the interest rate on federally subsidized loans just doubled to 6.8 percent.
As Congress scrambles to roll back that increase, one US senator is also proposing help for those with private, unsubsidized loans.
“Why should our students and graduates be the last to benefit from historically low interest rates?" Sherrod Brown ’74, an Ohio Democrat, asks in a press release.
Noting that student debt last year surpassed $1 trillion and that "81 percent of the undergraduates with high student debt had private loans," Brown says: "Helping graduates refinance their private student loan debt into more affordable terms frees up funds for them to buy houses, start businesses, or contribute to their communities.”
His Refinancing Education Funding to Invest (REFI) for the Future Act would "authorize the Department of the Treasury to find creative solutions that will eliminate inefficiencies in the private student loan market and accommodate reasonable refinancing opportunities," the press release says. It would also "encourage greater competition, innovation, and participation of private capital in a currently stagnant private student loan refinancing market."
Given the congressional deadlock over subsidized loans, Brown's plan "could seem far-fetched," Bloomberg BusinessWeek comments. But it does specify that the refinancing solutions should "not cost the government anything—and that’s something pretty much everyone can appreciate."
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