Massachusetts Senator Elizabeth Warren has introduced a bill to the Senate that would allow student loan holders to refinance their loans to current interest rates. Although skeptics doubt the bill’s chances of passing (GOP members would have to support additional revenues) it gives us a chance to reflect on how much student loan debt holders are coughing up in interest.
In an interview with Robert Rizzuto at MassLive.com, Senator Warren said “There are more than 40 million people currently dealing with student loan debt. When their interest rates are cut, many will save hundreds of dollars a month and many more will save thousands of dollars a month.”
Of course, refinancing your student loans isn’t anything new. Demand for lower interest rates has inspired some folks to get creative, such as SoFi, who offers refinancing through alumni networks. However, few individuals end up qualifying for the advertised rates, due to not having the necessary income or credit score.
This makes opening up the ability to refinance to all that much more dramatic.
Being able to repackage loans from 7.5 to 3.4 percent could save you big bucks. Paying down a $20,000 balance over 10 years at 7.5 percent would cost you $8,488, while a loan at 3.4 percent would mean paying $3,620 and $500 less in interest each year.
Your monthly payment? It’d drop from $237 to $197.
It’s pretty clear that our generation is facing a gigantic student loan problem. Growing in popularity is the notion that profiting off of the future’s educational investments — up to $66 Billion according government reporting — just doesn’t feel right.
Warren’s bill is an acknowledgement to this, telling MassLive.com “This (bill) brings that down. Instead of taxing students who can’t afford to pay for college up front, it says we are investing in those students.”
Investing? Certainly, but who stands to reap the benefits of said investments needs to be reexamined, as well. Especially as we’ve come to learn that student debt is growing faster at institutions with the highest paid leaders.
Senator Warren, you have our attention. Now let’s focus on getting students an education without the mortgage sized debt.
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