from buying alcohol, everyone else can refinance loans for lower interest rates. But at
a time when charges for borrowing money have hit nearly historic lows, students have been
locked into their older, higher rates.
A new bill looks to remedy that and promises to not only pay for itself, but cut government spending.
So, students, graduates and budget hawks are happy, and everybody wins.
tricky part — paying for the program — is something called the
Fair Share Tax. The reduction in spending would come from the second part of the bill.
Also called “The Buffet Rule,” named after Warren Buffet and championed by Elizabeth Warren, the tax mandates a minimum rate of 30 percent on those who bring in a million dollars or more a year.
students loans without a refinancing option is a profitable business — the
government is set to take in $66 billion on interest alone from loans issued
between 2007-2013, according to the Government Accountability Office.
The Banking on Students Emergency Loan Refinancing Act would allow those with loans issued before August 9 last year to refinance at the rates passed in 2013 — 3.8 percent for undergraduate loans.
Democrats, including Sen. Sherrod Brown, are trying to gather support for the bill. Brown filed the bill with Massachusetts Sen. Elizabeth Warren.
Warren introduced the bill in the Senate on May 5. She, Brown and other Democrats will be pushing it in the upcoming week.
“Every dollar a current borrower pays in interest is a dollar he or she can’t spend on a car, on a mortgage, or on starting a small business,” Brown said in an email sent out on Thursday requesting signatures to support the bill.
So far, 36 senators have signed it.
Last year, Congress lowered the rate of new loans but left existing rates the same.
Those higher rates are drowning graduates, keeping them stuck in their parents' basements, Warren said on the Senate floor last month.
“Make no mistake, this is an
emergency,” she said. “Student loan debt is exploding and it threatens the
stability of young people and the future of our economy.”
The Congressional Budget Office released a report on the bill Wednesday. The report found that lowering the rates of outstanding loans would increase spending by $51 billion, but with the new tax thrown in, the bill would also increase revenue by $72 billion between 2015-2019.
The report said deficits could be reduced in the next 10 years by about $22 billion.Congressional Republicans are sure to oppose the tax increase, considering most have signed Americans for Tax Reform’s taxpayer protection pledge to not raise taxes.
This won’t be the first time congressional Republicans have opposed the proposed tax. It was introduced in 2012 as the Paying a Fair Share Act and fell short of the votes needed to leave the Senate.
In the meantime, student loan debt totals $1.2 trillion, greater than all outstanding credit card debt.