The “Bank on Students Emergency Refinancing Act” in Congress would drop the rate on existing college loans to the current rate on federal loans, roughly 4 percent — a large reduction for students who took out loans for around 7 percent before the 2008 recession.
“Homeowners and businesses are often able to refinance their debts. Students should be able to do the same,” according to Representative John Tierney, a sponsor of the House version of the bill. “It is outrageous that students can’t refinance at these historically low interest rates,” said Senator Barbara Boxer. “This legislation gives students the same fair shot as other borrowers have when interest rates decline.”
Except for one thing. Students can already refinance their loans. Most of the existing loans are federal-direct or federally guaranteed. Students can take them to any bank of their choosing and ask for a lower interest rate, just as homeowners and businesses can. Why don't they? No private-sector bank is willing to take full responsibility for those loans at a lower rate — or even at the existing rate. The loans are not profitable for private lenders without taxpayer money to support them. In other words, students are already getting a great deal on federal loans because, as a group, they are terrible risks and need taxpayers to subsidize them.
The current bill is just more of the subsidy. I.E. it's a sub-prime loan. Remember them?
“Homeowners and businesses are often able to refinance their debts. Students should be able to do the same,” according to Representative John Tierney, a sponsor of the House version of the bill. “It is outrageous that students can’t refinance at these historically low interest rates,” said Senator Barbara Boxer. “This legislation gives students the same fair shot as other borrowers have when interest rates decline.”
Except for one thing. Students can already refinance their loans. Most of the existing loans are federal-direct or federally guaranteed. Students can take them to any bank of their choosing and ask for a lower interest rate, just as homeowners and businesses can. Why don't they? No private-sector bank is willing to take full responsibility for those loans at a lower rate — or even at the existing rate. The loans are not profitable for private lenders without taxpayer money to support them. In other words, students are already getting a great deal on federal loans because, as a group, they are terrible risks and need taxpayers to subsidize them.
The current bill is just more of the subsidy. I.E. it's a sub-prime loan. Remember them?
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