Warren Legislation Not the Answer to Student Debt Crisis, ADA Lobbies for Better Bills
September 17, 2014
The Senate this week is likely to determine whether to bring Sen. Elizabeth Warren’s (D-Mass.) Bank on Students Emergency Loan Refinancing Act (S. 2432) up for floor debate. The ADA supports the student loan interest provisions in the bill, but cannot endorse it due to a controversial tax increase provision that has nothing to do with student loan interest rates.
Sen. Warren’s bill would allow graduates who are currently repaying Federal Direct Stafford Loans (or Federal Direct Consolidation Loans) to consolidate (or refinance) those loans at the same low interest rate at which banks borrow money from the Federal Reserve (currently at about 0.75 percent). However, it also contains a tax increase that the Association opposes.
The ADA continues to support two other student loan bills:
- In the Senate, S. 1066, the Federal Student Loan Refinancing Act, introduced by Sen. Kirsten Gillibrand (D-N.Y.), would allow college graduates to consolidate or refinance direct unsubsidized Stafford Loans at a fixed rate of 4 percent.
- A House bill (H.R. 1527) introduced by Rep. Charles Rangel (D-N.Y.) would double the federal income tax deduction for student loan interest and remove the income cap that limits the availability of the deduction.