Rep. Courtney, Senator Warren Introduce Bicameral Bill to Give Student Loan Borrowers Access to Historic Low Rates Amid COVID-19
WASHINGTON, DC – Today, Congressman Joe Courtney (CT-02) and Senator 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 go into effect today. 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.
“Interest rates have reached historic lows across the country during the COVID-19 pandemic,” said Congressman Courtney. “If you’re a homeowner, you can refinance your mortgage; if you bought a motorcycle or a car, you can refinance your loan to pay less each month in the long run; but if you’re a student who invested in training or a degree, you’re blocked by law from refinancing your student loan. Student loan borrowers aren’t only young people just entering the economy—they’re small business owners, moms and dads, teachers and nurses, many of whom are slowly paying back student loan rates with sky-high interest rates, which were the norm a decade ago. They deserve the same opportunity to refinance their student loan debt right now in the same way that so many Americans are refinancing other debt, and they need it now more than ever.”
“I graduated from a public commuter college that cost $50 a semester, and it opened many doors for me. But today, student loan debt is crushing millions, especially during this pandemic,” said Senator Warren. “Now that federal student loan interest rates have plummeted, Congress must pass my bill with Representative Courtney to refinance student loans – and we also need to pass my legislation to cancel student debt for 42 million Americans.”
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, Rep. Courtney and Senator Warren’s 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 15th, the U.S. Department of Education announced new interest rates for Stafford student loan borrowers for the 2020-2021 school year, and today, those rates go 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%.