Update 3/20/15: This article has been updated to reflect the fact that Berkeley College Republicans President Claire Chiara is a former Daily Cal staff member.
On Wednesday, Rep. Joe Courtney, D-Connecticut, and Sen. Elizabeth Warren, D-Massachusetts, introduced the Bank on Students Emergency Loan Refinancing Act of 2015 to the House of Representatives and the Senate, respectively.
The bill, co-sponsored by 79 members of the House and 28 senators, proposes allowing people with high interest rates to refinance their student loans for lower interest rates. It is estimated that this would benefit 25 million borrowers nationwide, including approximately 2.3 million Californians.
According to Adam Ratliff, communications manager for student affairs at UC Berkeley, nearly two-thirds of undergraduate students at UC Berkeley receive financial aid.
“While this bill is not the silver bullet to addressing college affordability and the student loan crisis, it is an important first step to give people the option to refinance their loans at a lower interest rate,” said Rep. Barbara Lee, D-Oakland — who represents California’s 13th district, which includes Berkeley — in a statement.
With the passage of the bill, certain existing undergraduate student loans could be refinanced down to a 3.86 percent annual interest rate, graduate student loans could be refinanced to 5.41 percent, and parent loans could be refinanced to 6.41 percent. This would save borrowers on average $2,000 per loan.
“This bill works for all students and opens the door for everyone to benefit by refinancing their loans,” said James Lewis, Lee’s communications director. “As the cost of college goes up, even students from affluent families are taking loans, and scholarships are getting smaller.”
In a statement, Warren pointed out that student loans currently cannot be refinanced but that mortgages and car loans can. She said in the statement that the act could potentially boost the national economy and strengthen the middle class.
According to a press release on the website of Rep. John Garamendi, D-Fairfield, the bill was brought forward in Congress last year but was blocked by the Republican caucus in the House and filibustered in the Senate.
“This is an opportunity for Congress to work together on the case of student loans,” said Donald A. Lathbury, communications director for Garamendi, of the partisan divide. “Millions of people could benefit, and that’s something that crosses party lines.”
Claire Chiara, president of Berkeley College Republicans and former Daily Californian staff member, had some reservations about the effectiveness of such a bill, claiming that the problem with student debt lies mostly in the costs of tuition, not the interest rates.
“Instead of using the government to reactively alter these established rates, we need to overhaul the entire system and look at how tuition became so expensive to begin with,” Chiara said in an email.
National student debt levels have surpassed $1 trillion, becoming the second-highest source of debt behind mortgage debt.