With American college student loan debt at a staggering $1.2 trillion, U.S. Sen. Dick Durbin has a plan to help take the sting out of paying it back.
On Friday, he visited North Central College in Naperville to discuss proposed legislation that would give students a chance to drastically reduce the interest rates on their loans.
Durbin (D-Ill.) spent an hour Friday in the college’s Wentz Concert Hall and Fine Arts Center, outlining his Senate proposal and listening to the opinions and concerns of seven college students and alumni. College President Troy D. Hammond and Dean of Financial Aid Marty Rossman also participated in the session.
Almost 1.7 million Illinois residents have outstanding student loans, according to statistics provided by Durbin’s office. The average loan debt for members of the Class of 2012 was $28,028.
“Student debt has reached the breaking point in this country,” Durbin said. “Millions of borrowers are looking at a lifetime of debt, just because they wanted to do the right thing and get a college degree.
“So many students today are so deeply in debt, they will never, ever get out.”
Durbin said his bill, which he formally sponsored last week with two other senators, “will help ease that burden, allowing (students) to lower their interest rates.” He hopes his fellow senators will join him “in supporting this common-sense legislation.”
Many older, undergraduate student loans pack interest rates of 7 percent or higher. Conversely, undergraduates who took out new loans last year paid only a 3.86 percent rate, following congressional legislation that was passed last summer.
Durbin’s proposed “Bank on Students Emergency Loan Refinancing Act” would allow students to pare their loan interest rate to that same 3.86 percent level. Durbin said that would translate into savings of hundreds or thousands of dollars a year for potentially millions of borrowers.
The proposed legislation would allow those with federal FFEL loans or direct loans that were taken out before July 1 to refinance. The lower interest rates would be 3.86 percent for undergraduate direct loans, 5.41 percent for graduate loans and 6.41 percent for PLUS loans, which are taken out by students’ parents or guardians.
Those who obtained private loans would also be eligible for refinancing. Toward that end, Durbin’s bill would allow the federal government to purchase private loans from lending institutions, and reissue them as federal loans at lower interest rates.
Durbin said his legislation would be fully paid for by enacting the “Buffett Rule.” It would limit special tax breaks for America’s wealthiest citizens that allow them to pay lower, effective tax rates than middle-class families.
The discussion participants included Aurora resident and senior class member Stephania Rodriguez, a human resource management major who intends to pursue a master’s degree in higher education and student affairs. She will be the first member of her family to graduate from college.
“College scholarships and student loans are very important to me,” Rodriguez said. “(North Central College) does a good job of trying to meet the needs of students here” in that regard.
“I’ve been fortunate enough that I didn’t have to take out private loans,” Rodriguez said. She said she will have loan debt upon graduating, but declined to say how much.
Some of her friends and acquaintances have not been so fortunate.
“At least a couple of people I know have had to leave” the school because they were unable to obtain additional loans, she said.
Rodriguez said Durbin’s bill will help students.
“I feel that type of program will be beneficial, and will help with (student) retention on campus,” she said.
“It was interesting to learn more about the proposal,” Rodriguez said. “It’ll be interesting to see when this will take place.”
Information provided by North Central College indicates more than 96 percent of the school’s undergraduate students are provided some type of grant or scholarship. The college, during the current academic year, awarded more than $37 million in institutional grants and scholarships.
The school during that same period awarded students more than $6 million in Pell and state of Illinois MAP grants.