As the college graduating class of 2014 looks towards the future, some may see it includes paying down on the largest student loan debt ever of 1.2 Trillion dollars.
That’s a Trillion with a “T”; a 1 followed by 12 zeroes (1,000, 000, 000, 000). To put this in perspective – student loan debt now surpasses auto loans ($783 billion) and credit card debt ($679 billion).
According to the “Bank On Students Emergency Loan Refinancing Act” fact sheet, this year alone, the federal government will make $34 billion off of students.
If congress doesn’t act on Senator Elizabeth Warren (D-Mass) “Bank On Students Emergency Loan Refinancing Act” bill S. 2292 before July 1st, that amount will increase when the Stafford loan interest rate goes from its current rate of 3.4 percent to 6.8 percent.
In short, the bill asks Congress to allow students to refinance their loans at the same Federal Reserve interest rate it charged banks in 2013 – 0.75%.
It also asks the Federal Reserve to fund the student loan program, and the Department of Education administered it.
As of May 6th, however, S. 2292 “Bank on Students Emergency Loan Refinancing Act” sits in committee.
Student loan borrowers in the college graduating class of 2014 will have a 6-months grace period before their first loan payment becomes due.
If this bill becomes law – it will mean the difference between students paying $957.03 versus $9524 interest on a $25,000 loan.