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house Bill H.R. 2186

Should Borrowers Be Able to Refinance Their Federal Student Loans?

Argument in favor

Allowing student loan borrowers to refinance their student loans will lower their payments and let them spend that money in other parts of the U.S. economy.

jimK's Opinion
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05/25/2019
The student loan program is yet another example of a program that sounds good at the outset- but has negative consequences long term. Yes, borrowers of any sort can re-finance, so student borrowers should be afforded this same opportunity. The student loan program directly led to the huge increases in College tuition, and trapped borrowers In a spiral of ever increasing debt, There was no counseling about getting an education in areas that the economy needs and is willing to pay for. The government failed these borrowers and needs to help get them out from under their crushing debt.
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Kodiwodi's Opinion
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05/25/2019
It should be forgiven in total. Barring that, you can refinance any other loan, why not this? Arthur- SUGGESTION. Try Employment law as a paralegal. You have the most autonomy and you can work on your own representing anyone before any Administrative Judge. That includes any military, Union, Social Security, EEOC, Unemployment or Disability cases. Any case before an Administrative Judge does not require a lawyer just a representative.. You can really make a difference in your community and a good living.
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larubia's Opinion
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05/25/2019
Since student loans cannot be part of a bankruptcy, it is only fair that they should be able to refinance the loan for a lower rate/longer period.
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Argument opposed

Borrowers should know what they're getting into when they apply for the student loans — If interest rates were too high when they signed, they shouldn't have borrowed.

tituswife's Opinion
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05/25/2019
Get this out of the government, and return it to the banks. Then, let them decide. I did after I graduated, but the bank made the decision.
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Riley's Opinion
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05/29/2019
If you take out a loan, pay it back. It's not free money.
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AmericaIsARepublic's Opinion
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05/27/2019
Get the government out of the student loan business. It’s not constitutional. Government cannot be involved unless explicitly authorized by the constitution. Get the government out of the education business entirely as well. It’s not constitutional. Government cannot be involved in anything not explicitly authorized by the constitution. Reread the immediately preceding sentence over and over and over again until it becomes permanently ingrained in your brain.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Education and Labor
    IntroducedApril 9th, 2019

What is House Bill H.R. 2186?

This bill would change the interest rates for students borrowing through the William D. Ford Federal Direct Loan program, and allow borrowers to refinance their loans. Borrowers would be able to refinance their student loans at any time, which can potentially have the effect of lowering their interest rates and reducing their monthly payments.

Impact

People who have borrowed student loans through the William D. Ford Federal Direct Loan Program, companies that service student loans, the Department of Education.

Cost of House Bill H.R. 2186

A CBO cost estimate is unavailable.

More Information

In-DepthSponsoring Rep. Mark Pocan (D-WI) reintroduced this bill from the 115th (and before that, the 113th and 114th) Congress to allow borrowers to refinance their federal student loans any time a lower interest rate is available:

“Americans now hold more than $1.5 trillion in student loan debt, a staggering amount of debt that restricts Americans’ ability to contribute to the economy and make other major purchases, like buying a home or a new car. We must take steps to help reduce the crushing burden of student debt and allow millions of Americans to refinance their student loans, just like any other borrowers. Students deserve a fair shot at the middle class, not a multi-decade debt sentence. I’m proud to reintroduce the Student Loan Refinancing Act and I hope that my colleagues will join me in supporting this important legislation to bring down the long-term cost of a college degree.”

When he introduced this bill in the 115th Congress, Rep. Pocan said:

“With college debt skyrocketing, Congress should be doing everything it can to help reduce the crushing burden of student debt. The Student Loan Refinancing Act will allow nearly 44 million Americans to refinance their student loans, just like a mortgage or car loan. This bill would bring down the long-term cost of a college degree.”

One Wisconsin Now supports this bill's reintroduction. Annaliese Eicher, One Wisconsin Now's Executive Director, says

“Student loan borrowers worked hard to get their education and took on the personal responsibility to pay for it. They should be reaping the benefits of their education, but instead millions of Americans are trapped in the $1.5 trillion student loan debt crisis. The good news is that there are people like Rep. Pocan who get it, and who are doing something about it. Student loan debt has been at crisis levels for too long and it is far past time to for common sense reform, like allowing borrowers to refinance their loans just like you can with a mortgage as Rep. Pocan is proposing."

The American Federation of Teachers (AFT) expressed its support for this bill when it was introduced in the 115th Congress. AFT President Randi Weingarten said

“College is an increasingly necessary precondition for 21st-century middle-class jobs, and Americans who want to go to college deserve an affordable, accessible pathway to college. That is why this bill is so important: It provides immediate financial relief to millions of students and families, freeing them from unnecessarily burdensome debt, and makes it clear that student loans should help further students’ lives, not hold them back. President Trump's budget proposals this week curtailing student aid programs—at a time when far too many students incur crippling debt—in pursuit of a higher degree make Rep. Pocan's bill more urgent than ever.”

This bill has 27 bipartisan cosponsors, including 26 Democrats and one Republican, in the 116th Congress. In the 115th Congress, it had 58 bipartisan cosponsors (55 Democrats and three Republicans) and didn't see committee actionRep. Pocan first introduced this bill in 2013, but the Republicans who held the House blocked consideration of this bill in the 113th, 114th, and 115th Congresses. Last Congress, it was supported by the American Federation of Teachers and One Wisconsin Now.


Of Note: Student loan debt is the second-largest form of consumer debt in the U.S. (exceeded only by mortgage debt), with over 44 million borrowers owing over $1.5 trillion as of 2019, of which $1.4 trillion is federally-owned. Nationally, around two-thirds of students who earn Bachelor's degrees take out loans to help finance their educations, and the vast majority of those loans are originated by the federal government. In 2015, the average undergraduate student borrower left school with $30,100 in student loans — a 4% increase over 2014.

Student loan debt has been linked with the sluggish housing recovery because borrowers can’t afford to make an investment in a home, as well as declining sales of new cars. According to a Rutgers University study, 40% of graduates with college loans delayed making major purchases, such as cars, due to college debt and 25% of graduates put off continuing their educations or moved in with relatives to save money.

Interest rates are currently at historic lows and homeowners, corporations, and state and local governments are taking advantage of this to refinance and reduce their debts. By refinancing their debts, borrowers are able to replace existing debt with a new loan at a lower interest rate, reducing the value of their debt and freeing up income for purchases. However, student loan borrowers have been left out of the refinancing trend.

Allowing students to refinance their student loans could come at a cost to the federal government, as borrowers with good credit would be able to refinance with private lenders, leaving the government's portfolio with a larger proportion of borrowers who are unlikely to repay their loans. Through lost interest payments, this could cost the federal government billions of dollars.

Today, there's no federal refinancing option for student loan repayment. There's only a federal loan consolidation program


Media:

Summary by Eric Revell

(Photo Credit: Brett Jordan / Creative Commons)

AKA

Student Loan Refinancing Act

Official Title

To authorize borrowers of loans under the William D. Ford Federal Direct Loan Program to modify the interest rate of such loans to be equal to the interest rate for such loans at the time of modification.

    The student loan program is yet another example of a program that sounds good at the outset- but has negative consequences long term. Yes, borrowers of any sort can re-finance, so student borrowers should be afforded this same opportunity. The student loan program directly led to the huge increases in College tuition, and trapped borrowers In a spiral of ever increasing debt, There was no counseling about getting an education in areas that the economy needs and is willing to pay for. The government failed these borrowers and needs to help get them out from under their crushing debt.
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    Get this out of the government, and return it to the banks. Then, let them decide. I did after I graduated, but the bank made the decision.
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    More importantly, get the federal government out of the student loan business altogether. Give more academic scholarships and grants. Reinvest in trade programs and apprenticeships. You don’t need a 4 year college degree for many of the things that they now want a degree for. The boomers told us “go to college go to college go to college” but the “better life” hasn’t happened for more that half of us since 1980. Anyway it’s silly to give loans on something that is fundamentally intangible. Education can’t be repossessed like a car or a house. So why bother paying it back? The hit to the credit score? But so many people have that it hardly means anything. They take your tax refund? Apparently we all owe taxes now so no one was getting a refund anymore anyway. In fact, most of us (including me) who are paying our student loans are doing so out of our sense of obligation to the social contract. Forgive them all and stop giving them out. End the federal inflation of tuition.
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    It should be forgiven in total. Barring that, you can refinance any other loan, why not this? Arthur- SUGGESTION. Try Employment law as a paralegal. You have the most autonomy and you can work on your own representing anyone before any Administrative Judge. That includes any military, Union, Social Security, EEOC, Unemployment or Disability cases. Any case before an Administrative Judge does not require a lawyer just a representative.. You can really make a difference in your community and a good living.
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    Since student loans cannot be part of a bankruptcy, it is only fair that they should be able to refinance the loan for a lower rate/longer period.
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    Absolutely! Actually, I agree with Kodiwodi. We should wipe the debt clean and start over, reining in the excessive amounts these colleges are charging. I paid $1500.00, a year, inclusive of room and board, to go to a very well-known college in the 70’s. What they charge today is unconscionable. I know many of you think it would be unfair to those of us who struggled, yet paid our debt in full! However, those of us who paid our mortgages on time and weathered the 2007 debacle, had to sit by and watch as we bailed out the criminal bankers (who caused the mess, but were never punished for it) and saw thousands of people being forgiven for their mortgage debts, declaring bankruptcy and getting their credit rating restored, while those of us who religiously made our payments were not rewarded in any way. That was unfair, too. Yet we did it because it was a necessary thing to do. Just as getting this college debt forgiven, or greatly reduced is. We need to get these kids back in the mainstream. In the long term, it will benefit us all.
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    Yes, student borrowers should be allowed to refinance their loan package, much like another type of loans. However, in my mind, a lack of Republican support makes me reluctant to put a check mark in the YEA box. Maybe a little investigation is needed since it appears that some version of this bill has been brought to the floor in prior years.
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    It’ll make it easier for borrowers to pay back the loans when issues arise and it’ll allow lenders to recoup much more of the cost.
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    Refinancing yes. But shouldn’t we investigate why the colleges are so EXPENSIVE???? They are for the most part ran and operated by LIBERALS AND LEFTISTS. Shouldn’t THEY BE INVESTIGATED??? Where is ALL the money going??? We all pay to play. And the Education in these days are terrible. Nice was a shining light in the entire world our colleges have dwindled to a smoldering pile of ashes. All of our countries schools not just Colleges have fallen behind the rest of the world why???
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    It is to our advantage to educate our population so we can compete with other countries that have already surpassed us on education. The increase in the cost for college over the past several years had caused people who aren’t well off financially to require loans to go to college. And those loans are accompanied by high interest rates. It’s nearly like we are trying to dumb down the citizens of our country. And, if you watch what is happening now, I think it’s working. I’d like to see more states fund college by lottery or otherwise. But, at the very least college loans interest rates should be eliminated.
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    I’m all for students being able to Refinance Their ”Student Loans” Allowing student loan borrowers to refinance their student loans will lower their payments and let them spend that money in other parts of the U.S. economy. SneakyPete..... 👍🏻👍🏻 Refinance 👍🏻👍🏻. 5.25.19.....
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    Students need all the help they can get to meet their goals of a fruitful career without the lingering debts.
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    Of course they should be able to refinance! Americas youth is being held in lifetime debt for simply getting an education which we all benefit from so banks can make record profits. Our congress does nothing because too many are working for the benefit of the banks at the expense of our young citizens. Unacceptable!!!
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    If you take out a loan, pay it back. It's not free money.
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    Yes. Allow borrowers to refinance Federal student loans.
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    I support this refinance bill as long as the student's payment history is good on the loan. I think that this is a fair compromise to addressing the issue of educational costs rather than free education that only redeploys the cost to other taxpayers.
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    Yes & in some cases forgiven entirely. How about bailing out the people for once. Trillions were gifted to bail out ‘too big to fail’ banks in 2008 to prevent a mortgage collapse. Less was needed to simply refi or forgive all sub-prime mortgages. We now face the exact same problem with student debt. Let’s see who gets bailed out this time. Spoiler alert - not the people.
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    Of course!
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    Schools charging this much is insane. End this disaster before we have the next recession
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    The Nay reason sounds like something a tyrant would establish. We’re supposed to be a free market. I know government has taken over student loans, but this ruling should open up the market to provide cheaper and better services to students. Government should NOT be in any loan business.
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