The 114th Congress is again considering legislation to allow borrowers with outstanding student loan debt to refinance at rates set for new borrowers.
The legislation would allow people with outstanding student loan debt to refinance at interest rates approved last year for new borrowers, according to U.S. Sen. Elizabeth Warren (D-Mass.), who re-introduced the Bank on Students Emergency Loan Refinancing Act along with U.S. Rep. Joe Courtney (D-Conn.)
It comes at a time when student debt has surpassed $1.3 trillion and the average graduate is leaving school with nearly $29,000 in school loans.
Warren first introduced the legislation in May 2014. It was voted on in the 113th Congress and all Senate Democrats, along with three Senate Republicans, voted to move the bill forward. It fell just short of breaking a Republican filibuster. President Barack Obama then followed that defeat by proposing two plans designed to ease the burden of student loan debt.
Many borrowers with outstanding student loans have interest rates of nearly 7% or higher for undergraduate loans, while students who took out loans in the 2013-2014 school year pay a rate of 3.86% under the Bipartisan Student Loan Certainty Act passed by Congress in 2013, according to a news release from Warrens office.
"Since last year, nearly a million more borrowers have fallen behind on their student loan payments," Warren said. "Young people who are working hard to build a future deserve a real opportunity to succeed, and that means letting struggling borrowers refinance their student loans to take advantage of lower interest rates -the same way people refinance a mortgage, a car loan or business debt."
Obama in March introduced the Student Aid Bill of Rights, designed to ensure college affordability for borrowers as well as accountability of the U.S. Department of Education, its contractors and colleges.
The steps include growing a program that caps student loan payments to 10% of a persons income for 20 years.
Obama also directed the department to develop a new website for students and borrowers to use to file complaints and provide feedback about student loan lenders, collection agencies, servicers and institutions of higher education. The website will be launched by July 1, 2016.