With nearly 40 million student loan borrowers holding more than $1.2 trillion in student-loan debt, federal statistics now show that student-loan debt has surpassed credit cards as the country’s third largest type of household debt.
Moreover, millions of student-loan borrowers are in default, and even more are delinquent in payments.
But, help may be on the way in the form of several recent efforts to reform student loans by enabling borrowers to refinance at lower interest rates, much in the same way that auto and home loan holders have been able to for years.
U.S. Sen. Elizabeth Warren (D-MA) has recently introduced legislation—the Bank on Students Emergency Loan Refinancing Act—that would allow borrowers to refinance their student loans.
“Giving borrowers who have both federal and private loans the ability to refinance at current rates poses to save millions of dollars for those who need it most,” said Natalia Abrams, executive director of Student Debt Crisis, a nonprofit organization dedicated to fundamental reforms to the way in which higher education is paid for in America.
Abrams added, “This bill could help 25 million borrowers save thousands over the lifetime of their loans. Other proposals that we at Student Debt Crisis support are: Student Loan Fairness Act and Student Loan Borrowers Bill of Rights. We need strong consumer protections for student-loan borrowers and generally, to overhaul the entire system.”
Warren, who recently appeared on HBO’s “Real Time with Bill Maher,” told the host that the federal government was on track, for the years from 2007 to 2012, to realize a profit of around $66 billion from student loans.
“Right now, this country is taxing young people trying to get an education…so we can keep tax loopholes open for millionaires and billionaires,” said Warren, sparking a round of vigorous applause.
Last year, Sen. Kirsten Gillibrand (D-NY) also sponsored a plan to force the refinancing of many government loans with 4 percent or higher interest rates into fixed, 4-percent loans.
Gillibrand told the Huffington Post, “At a time when corporations, homeowners and even local governments are refinancing at historically low interest rates and saving millions of dollars, students and families who take out loans to pay for college are getting left behind.”
She added that helping graduates manage debt by keeping interest rates low was “just common sense.” Back in June, as part of a story on college affordability, a Queens College official told The Forum that the college works closely with students to help them find funding through state and federal grants, as well as alternate sources.
“More and more people need financial aid, no matter how low the tuition is—and we offer one of the lowest tuitions in the country,” said Jeffrey Rosenstock, assistant vice president for external and governmental relations at Queens College.
Rosenstock said that this strategy has been working, since 80 percent of Queens College students graduated debt free in the 2012-13 school year. He added that those who graduated with debt did so with an average of $14,000, or about $10,000 less than the state average.
However, some borough students have different stories to tell.
“I went to college in my late 20s while raising a then 6-year-old by myself. I took out loans for my undergraduate degree…I graduated in 2008 and I’m now struggling to pay those loans back as well as pay rent, household bills and everyday living expenses, while taking care of a son and mother,” said Estrellita Bravo, a human resources director who lives in Richmond Hill.
She added that her son will soon be going to college and she will most likely need to take out more loans in the future.
“We are encouraged to continue our education to get somewhere in life, but most of the time, the annual salary of the jobs we get [or] have don’t even cover the cost of your first year of college,” Bravo lamented. “I almost feel like I’m being punished for wanting to better myself.”
By Alan Krawitz