Skip to main content
  1. Life
  2. Education & Schools
  3. Education Policies

Warren’s student loan refinance bill would decrease deficit by $22 billion

See also

The Bank on Students Emergency Loan Refinancing Act, introduced in the Senate last month by Senator Elizabeth Warren, would increase federal revenues by $72.5 billion over the years 2015-2024, according to the CBO cost estimate released yesterday. The bill would allow borrowers to refinance outstanding federal student loans at current, lower rates. Holders of private student loans would also be allowed to refinance with a federal loan. The student loan program would collect $51 billion less in interest payments, leaving a net deficit reduction of approximately $22 billion over the next 10 years.

Warren introduced the Bank on Students Emergency Loan Refinancing Act over concerns that the burden of outstanding student loan debt is preventing new graduates from striking out on their own, buying cars, homes and other consumer goods, creating a drag on the economy. The bill would allow students to refinance at the current rates of 3.86 percent for undergraduate loans and 5.41 percent for graduate loans. Refinancing of Parent Plus loans to the current 6.41 percent is also included in the bill. Currently, outstanding student loans carry interest rates as high as 9 percent.

“This is an emergency. Student loan debt is crushing our young people and weighing down our economy.” — Massachusetts Senator Elizabeth Warren

Warrens says she believes it is wrong for the government to make a profit from the student loan program, and she would prefer to lower rates even further to eliminate that profit. She settled on current rates because her Republican colleagues have already agreed on these rates. The act’s 23 co-sponsors are all Democrats.

To pay for the Refinancing Act, the bill adopts the “Buffet Rule,” which closes tax loopholes for higher-income taxpayers. Called “The Fair Share Tax”, it would affect taxpayers with adjusted gross incomes between one and two million dollars. Taxpayers in this bracket would be required to pay the difference between their total income tax bill and 30 percent of their adjusted gross income.

This new tax may prove to be a sticking point with Republican members of Congress. Most have signed the Taxpayers Protection Pledge, vowing to oppose all efforts to increase tax rates. The Pledge, offered to candidates for statewide office, is promoted by Grover Norquist, President of Americans for Tax Reform.

Advertisement

Life

  • Derek Hough
    Derek Hough brings quadruple threat talent to 'DWTS' and beyond
    Today's Buzz
  • Hookah smoking
    Young adults believe hookah smoking pose no health threat
    Camera
    7 Photos
  • Top outdoor activities
    Don't spend your summer indoors: Top outdoor activities to do with your significant other
    Camera
    10 Photos
  • Baby shower idea for men
    A new twist on baby showers is throwing a Daddy Baby-Q
    Camera
    7 Photos
  • Wedding special
    'Curvy Brides' offers a new look into every bride's pursuit for her picture perfect wedding gown
    Camera
    7 Photos
  • Morbid obesity
    Health: Morbid obesity decreases life span by up to 16 years
    Camera
    7 Photos