“This solution will have a positive short-term impact by helping students to save money and pay off their loans more quickly,” said Rep. Tom Reed
Elizabeth Warren in a republican lawmaker and senior member of President-Elect Donald Trump’s transition team. She also seems to be an advocate for the vulnerable student loan borrowers. A law proposed by Warren was formally backed by Rep. Tom Reed. The bill would affect nearly 43 million student loan borrowers.
The plan would allow debtors with high-interest rate federal loans to refinance those loans into cheaper debt. Homeowners can take advantage of low-interest rates to refinance their loans into new government-backed debt. This is something you currently can’t do with student loans. Warren has been often outspoken on the issue citing its unfair to student debtors who are making a real effort to make good on their monthly payment.
“It is only right that young people who are working hard to pay off their student debt have the opportunity to refinance their loans when interest rates decrease,” Reed said in a document outlining his position. “This solution will have a positive short-term impact by helping students to save money and pay off their loans more quickly.”
Most Republicans are still against the bill, however, with Reed now backing it, the bill could be revisited with more support than ever. The bill was previously thought of as dead after Hillary Clinton lost the election. Under Warren’s original proposal, refinancing rates would range from 3.86% to 6.41%, or rates that prevailed during the 2013-2014 academic year.
“Donald Trump was delivered to Washington on a populist wave, and ultimately his legislative agenda will embrace that in some way,” said Isaac Boltansky, an analyst with Compass Point Research & Trading. “Student loan re-fi could be one of those components.”
John Garamendi is the California Democrat who authored the proposed law. Garamendi said he’s working hard to persuade his Republican colleagues to back the House bill. He implied that Reed’s sudden support might be his doing as well. Even when Reed was in support of student loan borrower’s ability to refinance in 2012, it took him seven months to sign Garamendi’s bill. For borrower’s sake hopefully, the rest of support will start to move a bit faster.
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