Lawmakers have renewed their support for students buried under piles of educational debt by — yet again – introducing a bill that would allow borrowers to refinance their student loans.
The Private Education Loan Modification Act – introduced on Tuesday by North Dakota Senator Heidi Heitkamp – would enable borrowers to refinance private education loan balances at reduced interest rates.
The Act would establish debt refinancing mechanisms aimed at providing relief for the estimated $150 billion in private student loans that often carry higher interest rates and lack the safeguards provided by federal student loans.
Under the Act, private student loan borrowers who have debt obligations that represent a disproportionate share of their income would be provided refinancing opportunities.
The purpose of the bill is to spur economic growth. To do so, the Act would:
• facilitate greater competition in the private education lending and refinancing markets, particularly those serving underserved and rural locations;
• address inefficiencies in the private education lending and refinancing markets
• encourage innovation in the private education refinancing markets; and
• promote the participation of private capital in the private education refinancing markets.
“With my bill, I’m trying to make it easier for students to refinance private education loans at today’s low interest rates, so they can pay down their debt and start off on the right foot when they graduate,” Heitkamp says in a statement.
In recent years legislators have turned their attention to attempting to alleviate student loan burdens for borrowers. Earlier this year, a number of senators banded together to once again introduce the Bank on Students Emergency Loan Refinancing Act that would allow consumers with outstanding student loan debt to refinance at lower interest rates currently being issued on new federal and private student loans.
A previous version of the bill was introduced by Massachusetts Senator Elizabeth Warren in May 2014 and co-sponsored by more than a dozen legislators.
by Ashlee Kieler via Consumerist