Should College Students Be Able To Refinance Their Loans? (H.R. 3047)

What is H.R. 3047?

(Updated March 13, 2018)

This bill would change the interest rates for students borrowing through the William D. Ford Federal Direct Loan program. Basically, students would be authorized to modify their interest rate to the rate they had when the loan was first disbursed, or first applied for. 

This new interest rate would be fixed for the life of the loan —  the borrower chooses to change the rate, and they can do so at any time.

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.

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.

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 H.R. 3047

A CBO cost estimate is unavailable.

Additional Info

In-Depth:

Student loan debt has been linked with the sluggish housing recovery as borrowers can’t afford to make an investment in a home, in addition to declining sales of new cars.

The average student loan balance for a person in their twenties has increased from $15,900 in 2005 to over $25,500 in 2014. While borrowers are struggling, the federal government made a $41 billion profit on student loans in 2013.

Media:

Sponsoring Rep. Mark Pocan (D-WI) Press Release

Rep. Mark Pocan (D-WI) Op-Ed in the Huffington Post

The Capital Times (In Favor)

Wisconsin Public Radio (Related bill)

CBO Analysis of Student Loan Program Modification Options (Context)