Mark Ferrulo
Student loan debt is crushing the American Dream for far too many Floridians and poses a significant threat to our nation’s economy. More than 40 million people across the country are burdened by student loan debt, and many college graduates will be hampered by this encumbrance their entire lives.
But there is a simple, common sense solution to this problem: refinancing.
Every day in Florida, homeowners refinance their mortgage loans to take advantage of a better interest rate. Refinancing is an important tool that helps consumers avoid foreclosure, and the lower rates help stimulate the economy through increased spending.
When the mortgage crisis was at its peak a few years ago, the federal government threw homeowners a lifeline in the form of mortgage refinancing options with lower interest rates. Many Floridians took advantage, helping them stay in their homes and bringing economic stability to their families.
Congress has a chance to make a real difference for millions of Americans by passing Sen. Elizabeth Warren’s “Bank on Students Emergency Loan Refinancing Act.” This bill would allow borrowers to refinance their student loans at current interest rates, just like you can with a mortgage or a car loan.
According to a report by Generation Progress, 1,375,000 student loan borrowers in Florida would benefit from refinancing.
In June, Warren’s bill was narrowly defeated in the U.S. Senate, falling just three votes short of the 60 needed for passage. Unfortunately, one of those “nay” votes was our own Sen. Marco Rubio. He should reconsider his position and side with Florida college graduates rather than his party leadership and their knee-jerk opposition to any legislation that asks millionaires to pay their fair share to support a more educated society and healthier economy.
Nationally, the average student in the Class of 2012 graduated with $29,400 of debt, according to the Institute for College Access & Success. The average for Florida students is $22,873. Total student loan debt is over $1.2 trillion — more than car loans and credit cards.
And unfortunately the student debt crisis doesn’t figure to end anytime soon. Tuition for Florida’s public universities has ballooned nearly 60 percent since 2008, according to the College Board. At the same time, Gov. Rick Scott has severely curtailed access to Florida’s popular Bright Futures scholarships, forcing future generations to take on more and more debt.
The increase in tuition, along with reduced access to financial aid, means more students are forced to borrow to complete their education.
The good news is that if Warren’s bill were passed, about 20 million borrowers would be able to refinance their loans within 18 months at much lower rates.
Passing the “Emergency Loan Refinancing Act” would save borrowers hundreds of millions of dollars that would be spent in the consumer economy. President Barack Obama has formally backed the proposal as part of his ambitious agenda to make higher education more affordable.
Most student loan borrowers have played by the rules, worked hard to get their education, and taken on the responsibility to pay for it. They deserve to be treated fairly by our government, rather than be a source of profit for it.
Now is the time for Florida’s leaders to act, starting with Rubio, and ensure that the current $1.2 trillion student debt crisis does not become a full-blown economic catastrophe.
Mark Ferrulo is the executive director of Progress Florida, a statewide progressive advocacy organization. Column courtesy of Context Florida.
