May 1, 2014
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April 8th, 2014 at the University of Central Florida. Invest in students! Invest in education!
Student Loan Refinancing - The Idaho Way
Student Loan Debt - America's Next Bubble
Nationally, student loan debt has reached a critical mass and is over 1.2 trillion dollars. In Idaho, the cost of tuition has increased every year since the early 2000's and the average Idahoan graduates with student loan debt of over $26,000. Every Idaho college graduate repaying his/her student loans is paying the Federal Government an average interest rate of 4%.
This July marked a disturbing change. New student loan interest rates were doubled to 6.8%-7%. Idaho can do better for our college graduates by offering student loan refinancing at lower rates than the federal government; all the while turning a profit that can be reinvested in need based scholarships for future generations. And quite frankly, we should do it today. According to USA Today,
"The $41.3 billion profit for the 2013 fiscal year is down $3.6 billion from the previous year but it's a higher profit level than all but two companies in the world: Exxon Mobil cleared $44.9 billion in 2012, and Apple cleared $41.7 billion."
The challenges are clear, many young Idahoans are moving away from this state; our current students are worried about how to afford college and whether or not they will find a career after graduation. It is our duty to help young people with these obstacles and to promote an educated workforce.
Refinancing Idaho's College Graduates Student Loans
This session, I authored HB419 to address this challenge. This legislation will allow college graduates with student loans to refinance their higher interest rate federal student loans through the Idaho Student Loan Refinancing Authority. Idaho will deliberately offer a lower rate than that which the federal government can offer. Current federal rates are:
"For Stafford loans, both the subsidized and unsubsidized, the interest rate is the Treasury rate plus 2.05%, with a cap of 8.25%. Graduate student loan rates are the Treasury rate plus 3.6%, with a cap of 9.5%, and the parent loans are the Treasury rate, plus 4.6%, with a cap of 10.5%."
This legislation provides the Idaho Student Loan Refinancing Authority with the ability to lower interest rates by at least one percent from the federal rate. This bill would create a better lending environment for students, and would generate profits from the interest accumulated. This legislation could become a great profit for Idaho and also give Idaho's college graduates better interest rates and increase their opportunities for grants and an affordable higher education.
Helping Our College Graduates Now - Financing Our Future College Students
In Idaho, 56% of all college graduates have an average debt of $26,000 from which the federal government currently earns substantial profits. If Idaho were to take these loans, and refinance them at one percent lower interest, the state would profit $5,254,149 on one year's worth of college students' interest. The upfront cost to "buy" the loans would have an initial start up cost; however, this investment would become self sustaining from the revenue generated from the interest. This would increase Idaho's educated work force and increase opportunity for Idahoans. The initial investment needed is just like any other business model, and will allow for a secure and profitable program that helps Idahoans. We must seriously consider a loan refinancing authority to decrease student loan payments and to reinvest the interest profits in higher education in order to help Idahoans. This bill will promote, enhance, and financially augment higher education. I believe that education is not only important, but should be affordable to students. Therefore when students take out loans to finish school, Idaho should provide students better interest rates. I believe that this legislation will help those students, Idaho's higher education system, and Idaho's economy. I plan to reintroduce this bill again next session.
House Republicans continue to do nothing to keep student loan interest rates low. An education is the best bridge into the middle class, but we keep raising the toll, making it harder and harder to cross. via Keith Ellison on Facebook
#DreamsNotDebt