Rep. Todd Rokita (R-IN) introduced legislation in May designed to help students cut down the cost of their loans by allowing them to refinance them.
The Indiana congressman worked across the aisle with Rep. Alcee Hastings (D-FL) on the bipartisan bill. If it becomes law, this proposal would allow students to refinance their loans to qualify for more affordable interest rates, ultimately lessening the burden on debtors.
“This problem is bigger than politics, and I am confident that my Democratic counterpart, Rep. Alcee Hastings, and I will be able to bring together both parties to address it,” Rokita told Red Alert Politics.
Interest rates for federally subsidized loans were at almost seven percent in 2007-08. Meanwhile, those who took out a student loan in 2011-12 received an interest rate of just over three percent. The idea behind the Student Loan Lower Interest Rate and Lower Monthly Payment Refinancing Act is to allow students, who may have borrowed at a time where the interest rates were high, to refinance their loan and get a more competitive price.
Both students and taxpayers would benefit from the refinance option. More than 4 million borrowers are currently in default and rising, with taxpayers footing the bill for the defaulted loans. Rep. Rokita said that by allowing students to refinance their loans and get a more competitive and fair rate, it would, in return, cause fewer debtors to default.
Rokita, who also serves as the Vice Chairman of the Budget Committee, said that he wants to help lift financial strains that student loans are having on graduates, parents, and taxpayers.
“I understand the impact that $1.3 trillion in outstanding federal student loan debt is having on our economy and how difficult it can be for borrowers to make ends meet while making payments,” Rokita said.
This proposed law is projected to save $20 billion in federal student loan programs over the next 10 years.
When asked who picks up the tab for the money lost in the refinance process, Rokita said, “My goal was not only to help borrowers, but to do so in a responsible way that didn’t merely transfer their student loan debt to the national debt. That is why my bill also includes cost-saving measures that should more than cover the costs of bringing down the interest rate on so many of these loans.”
This legislation has a long road ahead before being signed into law. However, the bipartisanship support behind it does make it appear that lawmakers are paying attention to the burdens young Americans are facing. Over 44 million borrowers are currently working to pay off their debts.
“This bill is a step in the right direction, but I would like to see a lot more done and am optimistic about the future,” Rokita said.
The GOP lawmaker is also on the Education and Workforce Committee and suggested that this bill is one of many to follow to help college students and graduates.
“We are currently working on reforms aimed at reforming student loans and making college more affordable. I have some very specific ideas of my own that I am currently moving forward on–stay tuned.”