Millennials will be watching

The soaring cost of college and static federal financial aid support have left millions of students with no option but to take out private loans to pay for college. This has severe financial consequences. Unlike federal loans, private loans lack protections like interest rate caps or income-based repayment programs that reduce monthly bills. That can mean hundreds of dollars more per month in payments that many borrowers simply can’t afford.

Thankfully, the U.S. Senate will vote this week on a bill that would help up to 25 million private and federal student loan borrowers pay off their loans. Known as the Bank on Students Act, the bill would allow borrowers to refinance their loans, taking advantage of market interest rates as low as 3.86 percent.  A White House report found that the bill would save borrowers on average $2,000 over the life of their loan. The bill actually got a vote in June, but despite having bipartisan support, a minority of Senators prevented it from even being debated. 

{mosads}My generation isn’t looking for any handouts. We’re ready and willing to repay every dollar we borrowed. But we’re facing sky high interest rates – particularly on private student loans – and few job prospects. It’s no wonder more than 1 in 8 student loan borrowers have defaulted on their student debt.

The Bank on Students Act is a common sense way to provide immediate relief to struggling borrowers. Plain and simple, they should be able to refinance their debt the same way their parents can refinance a home mortgage or local governments can refinance loans to pay for retiree pensions.

At Young Invincibles, we have heard from thousands of borrowers that being able to refinance their loans is important to them. Some have told us that refinancing would enable them to start a small business, save more for retirement, or put money away for a down payment on a home. Others have told us that it would make putting food on the table less of a burden.

Refinancing wouldn’t just help borrowers, it would also boost our entire economy. In fact, a recent study suggested that if students were able to refinance their debt, the economy would have seen an additional $21 billion in activity last year.

This shouldn’t be a partisan issue. The crippling impact student loan debt is having on our economy is felt by Democrats and Republicans. So when Senators get another chance to vote on this bill, I hope they will stand with the struggling borrower that is working overtime and eating frozen pizza a few nights a week in order to make ends meet. I’ll be watching, and Millennials will be too.

O’Sullivan is the deputy director of Young Invincibles.