CAP Recommends Refinancing Options For Student Loan Borrowers
Career College Central summary:
Analysis by the Center for American Progress estimates that student-loan borrowers who currently face rates greater than 5% could save as much as $14 billion per year, resulting in significantly reduced monthly payments, if they are able to refinance their student loans. The growing amount of student loans entering repayment has opened a critical window to provide refinancing options for student loan borrowers, writes David A. Bergeron of Center for American Progress.
Bergeron, who is vice president for postsecondary education at the Center for American Progress, writes that these borrowers likely would spend or save for larger purchases, increasing economic activity overall by as much as $21 billion. Bergeron wants Congress to move quickly to create opportunities for refinancing student loans while the cost of capital remains low.
Students enrolled in nation’s colleges and universities are borrowing at record rates to meet growing educational expenses. As college costs rise, so too does the amount each student is borrowing. While federal student loans can be consolidated, these and private loans cannot be refinanced, according to Bergeron.
Bergeron reviewed a number of proposals pending before Congress and recommend a number of elements that need to be included in a plan to permit student loan refinancing. Fluctuations in student interest rates and growing evidence of borrower distress in federal student loan programs and the portfolios of private loan providers suggest that new and aggressive policy solutions should be enacted, ensuring that repayment terms remain manageable and students are able to make progress in retiring their debt.
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