You may have heard recent buzz over newly proposed legislation that would allow students and former students to refinance their student loans. But what does this really mean to you?
The proposed law would attempt to afford students who have already taken out student loans at fixed rates to refinance these loans. Essentially what this would allow student to do is take advantage of the current lower interest rates that apply to new student loans. Sponsors of the legislation argue that allowing students to refinance their student debt is no different than the ability to refinance home debt or business debt. While borrowers can currently refinance other types of loans, it only seems fitting that students, who carry “good debt,” be allowed to do the same.
If legislation passes, students will be in a better position to control their financial futures. They will gain a greater ability to raise a family and to save for retirement, which is an area where the majority of Americans are in desperate need of help. Senator Elizabeth Warren, who is co-sponsor of the proposed legislation, has been quoted as saying, “The student loan debt is crushing our young people: At the moment they are beginning their economic lives, debt is dragging them backwards…Young people can’t move out of their parents’ homes, can’t save for a down payment, can’t buy a home, can’t buy cars, can’t save to build an economic future for themselves.”
Time will tell whether this will become law, but the fact that it has been proposed is a step toward that direction. The bill (S. 1066) will be voted on in the Senate later this month. That bill has a sister in the House: H.R. 4622. You can write your lawmakers and urge them to support both bills using ASDA’s advocacy alert system, Engage. Click here to take action now!
~Megan Mathers, JD, Pesavento & Pesavento