Immediately, U. S. Sen. Elizabeth Warren introduced a bill that tackles two of her policy priorities – college debt and the tax price paid by the wealthy. In doing so, she likened student loan interest rates to an upfront tax on college designed for students already struggling with today’ ersus skyrocketing tuition expenses.
Warren, a Massachusetts Democrat, will be poised to introduce a bill which usually, in part, would allow people holding student education loans financed at rates higher than today’ s interest rate to refinance those loans, similar to the way one refinances a home mortgage or car loan.
“ When rates of interest drop, people can refinance their home, they can refinance their business financial debt. It’ s regarded as a smart proceed for any consumer or business. Yet student borrowers are prohibited from doing that under most programs, ” Warren told MassLive. possuindo. “ This bill says we’ re going to change that and let them refinance that down to current low rates. ”
Warren said the measure, which would furthermore allow those with privately held student loan financial debt to refinance their debt beneath the Federal Direct Loan program, equates to savings for the consumer, which would become funneled back into the economy. It would also take a crack at the statistic showing that one in seven debtors defaults on their student loans within three years of beginning repayment.
“ There are more than 40 mil people currently dealing with student loan financial debt. When their interest rates are cut, many will save hundreds of dollars per month and many more will save thousands of dollars a month, ” Warren said. “ That’ ersus money they can use to build an economic future and to strengthen the economic climate. ”
Warren pointed to a report released by the Govt Accountability Office in January which usually determined that based on the loans released between 2007 and 2012, the federal government stood to profit to the melody of $66 billion from the curiosity. In her eyes, the government making money to that degree off the backs of individuals trying to better themselves is “ just plain wrong. ”
“ This is $66 billion on just the loans issued during that time period. That is insane, ” Warren said. “ This (bill) brings that down. Instead of taxing students which can’ t afford to pay for university up front, it says we are investing in those students. ”
But since cutting something that has created such a huge profit over simply five years will place a hole in the already-stretched federal budget, Warren is proposing a solution, albeit one which is bound to be viewed as being since political as it is practical.
Warren is proposing the government from the anticipated shortfall by enacting the particular so-called Buffett Rule, which is derived from a statement made by billionaire Warren Buffett, who suggested that he shouldn’ t be taxed at a decrease rate than his secretary.
Enacting the Buffett Principle, which Republicans in the Senate identified to kill in 2012 calling this a “ political stunt, ” would increase the income tax rate of Americans earning more than $1 million each year. The money generated through that proceed, according to Warren, would make the distinction and send a message about the nation’ s “ values. ”
“ The act addresses the full budgetary cost of refinancing by implementing the Buffett Rule. Basically, the way I see it, there are billions of dollars here that flow out from the U. S. Treasury to a taxes loophole, that are available to millionaires plus billionaires. This bill says to utilize that money to reduce the interest price on student loans, ” Warren said. “ So it’ s quite a direct choice – should The united states be investing billions of dollars in tax loopholes for billionaires or even investing that money to help young adults who are trying to get an education? I think spending should be consistent with our beliefs. ”
When asked if the political nature of how the particular mass refinancing would be paid for damages the bill’ s chances of becoming law, Warren said that she designed it using the same interest rates Conservatives voted to approve in the summer of 2013, so a choice would have to be made.
“ I start with the fact that nearly all of the Republicans identified to reduce the interest rate on new loans last summer. This costs picks up exactly the same (interest rate) amounts they voted for and says let’ s use this to refinance all loans. The Republicans have previously voted to say an interest rate above the existing lending rate is too high, so what about the $1. 2 trillion which is outstanding? ” Warren said. “ If the Republicans feel like it’ ersus more important to keep the tax loopholes open, then they are making their beliefs very clear, and that will be a sharp distinction between the two parties. ”
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