NEW YORK (CBSNewYork/AP) — U.S. Sen. Kirsten Gillibrand (D-N.Y.) has proposed new legislation to ease the burden for students who have taken out loans to pay for their education.
Gillibrand announced Sunday morning new legislation that would allow student borrowers currently repaying their federal student loans to refinance at a lower interest rate.
As WCBS 880’s Monica Miller reported, businesses and homeowners are getting a break on their loans, and Gillibrand thinks college graduates should be too.
“Getting a college degree is the gateway to the middle class in this country,” Gillibrand said. “It’s the gateway to be able to buy a home, start a family, provide for your family.”
But that is all being hampered by crushing loan debt, she said.
“More city graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before,” Gillibrand said in a statement. “Our young people should be able to refinance in the same way that our businesses and homeowners do.”
The average student loan debt for New Yorkers is nearly $30,000, Gillibrand said.
“Our students are burdened down by too much student loan debt,” she said.
The Federal Student Loan Refinancing Act would enable students and graduates who have an interest rate above 4 percent to refinance their federal loans at a lower fixed rate of 4 percent.
“Most people have a rate that’s determined when they take out their loans, so it might be 6 percent, it might be 8 percent – it varies,” Gillibrand said.
The senator says the bill would lower rates for nearly nine in 10 federal student loans nationwide.
In New York, there are 2.7 million borrowers and 37 million nationwide.
In addition to her legislation, Gillibrand said Sunday she would push to stop interest rate hikes set to go into effect in July for federal Stafford loans. Those rates are set to double to 6.8 percent in July.
In New York, more than 422,000 students have borrowed through Stafford loans, Gillibrand said.
She said she would propose closing tax loopholes, including corporate offshore tax loopholes, to fully pay for a Senate bill that could freeze need-based Stafford loans at 3.4 percent for two years.
Gillibrand said if Congress does not act by July 1, the average New York student will have to pay an estimated $993 more in federal Stafford loans.
She said she believes there is support for the bill on both sides of the aisle.
“And I think it’s a common sense measure that will save students thousands of dollars over the life of their loans,” Gillibrand said.
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