Hirono, Schatz Support Bill to Lower Student Loan InterestMay 12, 2014, 1:44 PM HST (Updated May 12, 2014, 1:45 PM)
Hawaii’s US senators last week joined a coalition working to reduce interest rates on outstanding student loans.
Nationwide, some 38 million Americans are paying off student loans which carry interest rates of 6.8% or higher.
While a law passed last year allows students taking out new loans before July to pay a rate of 3.86%, those with outstanding student loans are not allowed to refinance to take advantage of today’s lower interest rates.
As a result, Sen. Elizabeth Warren (D-MA) introduced a bill that would allow them to refinance the loans at a lower rate.
Hawaii Sens. Mazie Hirono and Brian Schatz are among the 23 co-sponsors of the Bank on Students Emergency Loan Refinancing Act, all of whom are Democrats.
“With the rise of college costs over the last two decades, students have increasingly had to rely on federal student loans,” Hirono said in a statement.
She noted that in Hawaii, the average student loan debt is $23,000.
Last year, more than 20,000 Hawaii college students last year took out federal loans to help pay for school.
“This debt can make it extremely difficult for individuals and families to build a future beyond school, including owning a home, starting a business and pursuing their dreams,” Hirono said.
According to Schatz, the cost of college has increased three-fold over the last 30 years.
He said the student loan debt is now the highest form of personal debt behind mortgages, currently standing at more than $1.1 trillion.
In comments delivered on the Senate floor, Schatz said that making college more affordable and reducing student loan debt is key to giving Americans a “fair shot” at climbing the economic ladder.
He noted that the cost of college is growing faster than all other consumer goods – and twice as fast as healthcare.
“The growing cost of college is preventing some from getting a degree in the first place, and leaving others with unmanageable levels of debt,” Schatz said. “This is one of the biggest middle class problems of our time.
“This debt burden is simply not sustainable,” he said. “Saddled with this debt, young adults are delaying starting families, buying homes and cars, and starting new businesses.”
Schatz said the high student loan interest rates are also contributing to a high delinquency rate, as more than a third of borrowers in repayment are 90 days or more in arrears.