Proposal: Change law to allow people to refinance student debt

Proposal: Change law to allow people to refinance student debt »Play Video

EUGENE, Ore. - Jack Rolow expects to be $20,000 in debt by the time he graduates from the University of Oregon.

“I try not to think about it,” he said. “I just tell myself that’s far off, and I won’t have to worry until the distant future. The closer I get to it, the more I try to pretend it’s not real.”

But students like Jack will benefit from legislation passed last summer that tie loan rates to financial markets, lowering interest for new borrowers.

Senator Jeff Merkley, D-Oregon, said that’s a step in the right direction but doesn’t solve the whole problem.

“A lot of folks have talked to me and said 'there's a lot of discussion on lower rates for new student loans, but what about refinancing the loans I have’?” Merkley said.

That’s where a piece of national legislation comes into play.

On Tuesday, Senator Elizabeth Warren introduced a bill to the Senate that, if made into a law, would let those with existing student loans refinance the loans, allowing them to get the same low rates as people borrowing now.

Some student loans have interest rates above 8 percent. If these borrowers are able to refinance to the current undergraduate rate of less than 4 percent, it could save them thousands of dollars in the long run.
 
Student debt is a problem that affects the majority of students.

According to the non-profit American Student Assistance, roughly 60 percent of students in higher education have to borrow money annually to pay for school.
 
The organization said the average student loan balance in 2012 was more than $24,000.

Rolow believes high loan rates have changed the way many students approach higher education.
 
“Before I guess the current generation, I would say that a lot of people would go and just kind of figure themselves out,” Rolow said. “Once the loans skyrocketed, that kind of more became a thing that was of an era long gone by. Like they didn't really have the chance to do that because it was so expensive.”

Senator Merkley is one of more than 20 co-sponsors of the Senate bill, something he believes will help people afford college.
 
“This whole issue goes right to the heart of whether or not our children believe there is a pathway for them to pursue their talents and their skills and their dreams,” Merkley said.