Newport, RI – With the U.S. Senate expected to consider legislation next week which would lower student loan payments for millions of Americans, U.S. Senators Jack Reed and Sheldon Whitehouse today held a discussion with students, financial aid experts, and community leaders at the Community College of Rhode Island’s (CCRI) Newport campus to hear from Rhode Islanders who are concerned about the growing student debt crisis. The Senators heard from working Rhode Islanders who are struggling to pay back student loans, as well as from CCRI financial aid professionals and Susan Arnold, CEO of the RI Association of Realtors, who discussed how rising student loan debt and defaults are hurting the housing market.
The Senate is expected to hold a procedural vote next week on the Bank on Students Emergency Loan Refinancing Act. The legislation, which Senator Reed helped to craft and which both Senators strongly support, would allow millions of individuals with student loan debt to refinance their loans at lower rates. Many loans that were dispersed during the last decade came with high interest rates, with some loans exceeding 8 percent. As a result, the Government Accountability Office (GAO) estimated that the federal government would earn an estimated $66 billion from student loans originated between 2007 and 2012.
The Bank on Students Emergency Loan Refinancing Act would allow existing borrowers to refinance using applicable 2013-2014 federal loan rates, which range from 3.86 percent for undergraduate loans to 6.41 percent for certain graduate and professional school loans.
“Students deserve a fair shot at an affordable education. Federal student loans are supposed to be an investment in helping individuals reach their potential and strengthening our communities, not a revenue generator for the government. So one of the ways we’re trying to help is by allowing student loan borrowers with high fixed rates to refinance at a lower rate,” said Senator Reed. “Student loans should help people get ahead, not weigh them down with debt. Looking forward, we need to work together to tackle the drivers of student loan debt – rapidly rising college costs and a roll back of state investment in higher education. We need to get back to the ideas that educating Americans is fundamentally in our national interest and that we have a shared responsibility – at the federal, state, local, institutional, and individual levels—for investing in our people. We need to ensure that this generation and future generations have opportunities to develop their talents and pursue their dreams in order to secure a brighter future for them and our country.”
“The message we heard today was clear: Rhode Islanders need relief from the student debt burden,” said Whitehouse. “Student loan debt is hurting our economy by pinching household budgets and limiting the ability of graduates to buy a home or make other long-term financial decisions. Thankfully, Senator Reed has been at the forefront of efforts to provide fair interest rates for student loan borrowers, and we’ll be voting next week on legislation he helped write that could help thousands of Rhode Islanders. We’ll keep fighting to make progress for Rhode Islanders.”
The legislation would allow roughly 25 million student loan borrowers – including an estimated 88,000 Rhode Islanders – to refinance their student loans at lower rates, saving each borrower an average of $2,000 over the life of his or her loan. It would be fully paid for by implementing the Buffett Rule – legislation Senator Whitehouse first introduced in 2012 – which would require multi-million-dollar earners to pay an effective federal income tax rate at least as high at that paid by millions of middle-class families.
“My student loans are not only affecting me and my life choices, they’re affecting my son’s too. He’s a senior in high school and is starting to look at colleges, but his options are limited because my own student loans will make it hard for me to help him pay for it,” said Danielle Dirocco, who serves as the Director of Graduate Assistants United, the graduate employee union at the University of Rhode Island. “Any relief I can get from my student loans would be a big help.”
“Upon graduating, I was afraid to even look at the payback amount,” said Lori Ann Perretta, a Cranston resident. “When I finally had the courage to look at it, the total was $217,000. But this wasn’t the most shocking part for me. When I was completing the loan exit form, I was informed that I am being charged $29 per day in interest. It seems impossible to pay back the interest alone, so I wonder when I will ever pay back the principle. I am in the midst of a postdoctoral program in which I hope to make about $1,000 per month. With my first two monthly paychecks amounting to $250, I feel very worried about paying back my loans. Knowing that action is being taken in the Senate means a lot to me and to my colleagues.”
“Our concern as REALTORS is that many young people engulfed by student debt aren’t able to fully enjoy the start of their independent lives – settling down, buying a home and enjoying family and community,” said Susan Arnold. “They are so indebted to their alma mater, they aren’t in a position to purchase a home and likely won’t be able to for some time to come.”
“Even with stable tuition rates at the Community College of Rhode Island for the past three years, we remain ever cognizant of our students and alumni and their ability to pay off student loans,” said CCRI president Ray Di Pasquale. “Any plan or proposal to reduce that burden is welcome news in the educational sector. We enthusiastically support Sen. Reed’s bill to allow students the opportunity to refinance their federal and private loans.”