WASHINGTON Sen. Elizabeth Warren unveiled a bill Tuesday that would raise taxes on the wealthy to allow those with outstanding student loans to tap into low interest rates.
The Bank on Students Emergency Loan Refinancing Act co-sponsored by 23 other Senate Democrats would enable existing student loan borrowers to refinance at rates similar to those set by Congress last year for new undergraduate loans. House Democrats plan to release similar legislation.
"Allowing students to refinance their loans would put money back in the pockets of people who invested in their education," Warren said in a press release. "These students didn't go to the mall and run up charges on a credit card. They worked hard and learned new skills that will benefit this country and help us build a stronger middle class and a stronger America."
The bill would allow borrowers looking to refinance, who now pay interest rates of nearly 7% or more, could access rates in line with those set for new students under the Bipartisan Student Loan Refinancing Act enacted last summer. Those students pay a rate of 3.86% on new loans, the press release said.
Those who would be eligible include federal student loan borrowers either in the Federal Family Education Loan Program or those in the Direct Loan Program, according to a factsheet released by Warren's office. The bill would also allow private student loan borrowers to refinance into loans with rates equal to those offered to new federal student loan borrowers, the factsheet.
The release says the bill would be "fully funded" by also enacting the so-called Buffett Rule, a concept Democrats have supported in budget proceedings to raise effective tax rates on the wealthy. It was named for financier Warren Buffett, who famously criticized how the tax code allows him to pay a lower percentage in taxes than those in the middle class.
"This legislation would offer students less costly loans and pay for that relief by asking multi-billion-dollar earners to pay their fair share of taxes," said Sen. Sheldon Whitehouse, D-R.I., one of the cosponsors.