Congressman’s bill to ease student loan debt awaits committee action
Rep. John Garamendi, D-Solano, who last fall introduced a bill to ease the American college graduate’s loan burden, awaits action on the bipartisan legislation, H.R. 4001, that is now in the hands of a Republican-controlled committee.
He and Rep. Brian Fitzpatrick, R-Pa., introduced the bipartisan Student Loan Refinancing and Recalculating Act in October as a way to address the ballooning student loan debt that today has risen to $1.5 trillion (about the same amount as the Tax Cuts and Jobs Act that Congress and President Trump OK’d in December). Of that debt, which affects 40 million Americans and their families, nearly $900 billion is held by the federal government at interest rates of up to nearly 7 percent, a rate that “far exceeds” the market costs for most government loans, Garamendi, who is seeking re-election in November, noted in a press release following the bill’s introduction to the House Education and the Workforce Committee.
In a follow-up interview after his visit to The Reporter offices in January, he said the bill still awaits action in the committee, which is headed by Reps. Virginia Foxx, R-N.C., and Robert Scott, D-Va., the ranking member, with Republicans holding the majority of seats, 23 to 17. (East Bay Democrat Mark DeSaulnier, whose district stretches from Alamo to Concord to Richmond, is also a member.)
Basically, the legislation would allow students to refinance their student loan interest rates, lower future student loan interest rates, eliminate origination fees on student loans, delay student loan interest rate accrual for low-income and middle-class borrowers while they pursue their education. It also would allow for borrowers in medical or dental residencies and internships — graduates typically saddled with hundreds of thousands of dollars in debt — to defer payments until the completion of their programs.
“For many Americans, the price of a college education is too high,” Garamendi, who represents the sprawling 3rd Congressional District, said in the prepared statement. “The average 2016 graduate owes over $37,172 in student loan debt. This mountain of debt prevents graduates from reaching important milestones such as starting a family, buying a house, or opening their own business. This bill would help relieve some of the debt burden faced by American students and their families, while ensuring that the federal government is not making a profit on the backs of students.”
Garamendi first unveiled the legislation during a May 2016 press conference at the University of California, Davis, when student loan debt was $1 trillion and two years later, 50 percent higher, remains the subject of Page 1 newspaper headlines.
If the bill becomes law, it set student loan interest rates to the 10-year Treasury rate (at 2.9 percent Tuesday), plus 1 percent, allowing students and graduates to pay off the debt more quickly. And under the bill, the loan’s “origination fee” would be eliminated.
“What we need to do is give students a chance,” to relieve their debt load, he said at the UC Davis gathering.
He said the law would not only lower college loan rates but it also would allow students to refinance their loans at the proposed lower rate.
This change would give students the chance to reinvest in the economy, he has long maintained.
Just how the changes would affect college students would vary, of course, but undergraduate students with average student loan debt of $35,000 would save some $2,800 over the life of their loan, while graduate students with a $57,600 average debt load would save nearly $3,500.
At the same time, H.R. 4001 also ensures that borrowers with a family tuition contribution less than or equal to $10,000 will not accrue interest on their student loans while they attend school.
The bill is endorsed by the Higher Education Loan Coalition, American Association of Orthodontists, Academy of General Dentistry, American Academy of Oral and Maxillofacial Pathology, American Academy of Pediatric Dentistry, American Academy of Periodontology, American Association of Endodontists, American Association of Oral and Maxillofacial Surgeons, American Association of Public Health Dentistry, American Association of Women Dentists, American Dental Association, American Dental Education Association, American Society of Dentist Anesthesiologists, American Student Dental Association, National Dental Association, Student National Dental Association, and California Society of Anesthesiologists.