DeSaulnier bill would lower student loan rates

Student loan borrowers would be able to refinance their interest rates at the rate offered to banks by the Federal Reserve, under a bill announced Monday by Rep. Mark DeSaulnier.

DeSaulnier, D-Concord, held an event at the University of California, Berkeley to roll out H.R. 3675, the Student Borrower Fairness Act, which would offset its costs by increasing corporate tax rates on companies that pay their CEOs or highest paid employees more than 100 times the median compensation of all employees.

Mark DeSaulnier“It is patently unfair that the same big banks that toppled our economy borrow from the federal government at extremely low interest rates while student borrowers are struggling to pay back their loans,” DeSaulnier said in a news release. “Meanwhile, people of all ages are buried in student loan debt which holds them back from being able to buy a car, purchase a home, save for retirement, or start a family. This bill is a first step toward making sure our students can emerge from under their piles of crippling debt and enter tomorrow’s highly-trained workforce.”

Congress acted on student loan rates in 2013, but the changes only applied to new borrowers.

UC-Berkeley Chancellor Nicholas Dirks applauded the bill. “College students and their families depend on student loans to access higher education,” Dirks said in the congressman’s release. “At Berkeley, we are proud that 61 percent of our undergraduates graduate without debt and the average debt of students who do borrow is only $17,584, much lower than the national average. This legislation would benefit all borrowers because it will help them manage their debt and repayment.”

James Donahue, president of St. Mary’s College of California in Moraga, said his college “is built on the idea that education has the power to transform lives. The Student Borrower Fairness Act will provide opportunities for all students to pursue their dreams of a higher education, and ultimately highly successful lives. Student loan debt is a national issue and reducing it must be a national priority.”

DeSaulnier’s office said outstanding student loans now total more than $1.3 trillion, surpassing total credit card debt. More than 37 million Americans have outstanding student loan debt, with an average outstanding balance of $29,400 for those who borrowed to get a bachelor’s degree. From 2004 to 2012, student loan debt rose an average of 14 percent per year.

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.

  • Elwood

    Oh, for God’s sake!

    He was full of crap as a bartender, but this is totally out of control.

    After Congress passes Marky Mark’s bill it will be escorted to the White House for signature by a squadron of flying pigs.

  • jskdn

    The Federal Reserve can set any rate it want because it essential prints money and their discount rate for years has been about zero, actually negative in real terms. The federal government gets much of the money it uses by borrowing at a higher interest rate than the fed’s discount rate. I think the benchmark rate for calculating the interest rate on student loans is the 10-year treasury. DeSaulnier proposal is massively irresponsible. Unfortunately student loan rates are as high as they are because some people don’t pay theirs back or are forgiven by the government policies, many largely created by the executive branch without the consent of Congress. The same is true regarding what many pay to go to college: they pay more because others aren’t paying.

  • JohnW

    As a baby boom generation college student, I think I finished undergrad with about $1,500 loan debt and paid for the rest with my own money and help from parents. I felt “out of control” with just that much debt and paid it back quickly. I would have been a basket case if I had had to deal with the kind of loans it takes to get through college today. I actually made a “profit” in grad school (GI bill plus TA stipend).

  • R. Sung

    Finally, someone who gets it! After completing graduate (law) school, my debt was in the 6 figures. This is b/c I did not have a mommy or daddy who could help me out with any of my costs (unlike most of my classmates – there were only a handful of us who borrowed the whole cost). I worked during my entire post high school education and at one time juggled three jobs. It is disgusting to me when I hear about CEOs at big financial institutions (who caused the housing crisis) getting off practically scott free while people like myself have to struggle to “live the American dream.” People think that as an attorney you will make up for the cost of your education b/c you earn a lot, but what about having a family and some work-life balance? If you earn a lot, it’s b/c you are being worked to the bone. It’s a catch-22. And don’t even get me started about the competition out there. I work for the government now and, believe me, it does not pay enough for me to pay for all of my family expenses (i’m talking basic necessity) and my student debt, but i keep at it b/c it gives me the flexibility i need to be around for my kids. And, no, i do not qualify for loan forgiveness which is completely bogus. I looked into that and you have to basically be making something like 30K a year for 10 years to qualify! I don’t know any attorney in their right mind who would subject themselves to such low pay for such a long time, unless this person has other financial means and treats their job as a hobby. For all you people who think this guy’s full of it, you clearly are not on the other (i.e., my) end of it and have no experience with being in such a situation. At the rate i’m going, i’ll be paying my loan until i die. I once asked about what happened if i stopped paying and was told that it would be reported to the credit bureaus. Basically, your credit would tank. Do you know how awful it is to have your credit in the toilet? I actually know another attorney to whom this happened b/c he couldn’t get a job due to the economy being crappy – and he’s a good attorney! He had a hell of time getting out of his rut and was only able to do so b/c of his wife. I don’t know anyone who would willingly bad credit if they actually had the means to pay.