A bill proposed by a U.S. congressman from California could reduce student debt nationwide by decreasing interest rates on student loans.
Congressman John Garamendi (D-CA) unveiled the Student Loan Refinancing and Recalculating Act at UC Davis on Tuesday, according to a press release from his office.
The proposed bill contains four objectives — called “the four Rs” — which would act to refinance existing student loans and recalculate new loans at a lower interest rate. These changes would in turn reduce students’ debt burdens and allow for reinvestment in American society and economy.
“The Student Loan Refinancing and Recalculating Act would save millions of students and parents thousands of dollars as they prepare for the future,” said Garamendi, according to the press release.
In addition, loans to students with expected family contributions less than or equal to $10,000 will not accrue interest while they are still in school.
According to the press release, these actions would translate into savings of $2,760 for undergraduate students with average student loan debt ($35,051) and $3,480 in savings for graduate students with average student loan debt ($57,600).
The bill would cap interest rates for graduate and undergraduate student loans at 3.23 percent. This rate was proposed as the level required to sustain the administrative costs of granting loans, without allowing the government to profit from student loans — a current practice that the bill aims to halt.
“There’s no reason for the government to be making a profit off of people who want an education,” said Donald Lathbury, communications director for the Congressman.
The proposed legislation has received support from both campus and university officials such as Carolyn Henrich, the director of education at the UC Office for Federal Government Relations in Washington, D.C. Henrich sees the legislation’s outlined proposals as positive steps toward combating the issue of student debt nationwide.
“College affordability overall is very important to us,” Henrich said. “We feel the University of California has a pretty good record in this regard.”
The bill expands on the work of lawmakers such as Elizabeth Warren, in part by aiming to lower interest rates for graduate student loans, according to Lathbury.
“Right now it’s still in the early stages of its life cycle, but the goal is to build a movement such that congress can’t ignore it,” Lathbury said.
Students on campus expressed their support for measures intended to alleviate student debt burdens, emphasizing the significance of the issue for students across the country.
“I think it’s important that the government invests in us. … It’s important that we get started on the right foot economically,” said Zoe Temple, a second-year undergraduate on campus.
The bill will be formally introduced to the legislature next week.
Maxwell Jenkins-Goetz covers higher education. Contact him at [email protected].