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.


Senators urge dropping barriers to refinance

Both of California’s U.S. Senators are among more than a dozen from both sides of the aisle who urged the Obama Administration today to make administrative reforms to help millions of responsible homeowners refinance and take advantage of today’s record-low interest rates.

The lawmakers – writing to Housing and Urban Development Secretary Shaun Donovan, Treasury Secretary Timothy Geithner, National Economic Council Director Gene Sperling and Federal Housing Finance Agency Acting Director Edward DeMarco – said that with interest rates at 3.94 percent, it’s time to lower barriers that keep borrowers trapped in higher-interest loans and to address other hurdles that limit existing refinancing programs.

Specifically, they called for removing loan-to-value limits, which they said would provide the most at-risk borrowers an alternative to simply walking away from their mortgage; eliminating loan level price adjustments, which they say make a refinance less affordable, reduce the benefit to the borrower, and can’t be justified on loans on which Fannie Mae and Freddie Mac already bear the risk; and ensuring that second lien holders don’t stand in the way of a refinance.

“Time is of the essence and we urge you to act quickly and aggressively to ensure that responsible homeowners receive the full benefit of these lower rates,” they wrote.

In addition to U.S. Senators Barbara Boxer, D-Calif., and Dianne Feinstein, D-Calif., the letter was signed by Johnny Isakson, R-Ga.; Robert Menendez, D-N.J.; Mark Begich, D-Alaska; Jeff Merkley, D-Ore.; Sheldon Whitehouse, D-R.I; Debbie Stabenow, D-Mich.; Scott Brown, R-Mass.; Robert Casey Jr., D-Pa.; Richard Burr, R-N.C.; Frank Lautenberg, D-N.J.; John Kerry, D-Mass.; Mark Warner, D-Va.; Saxby Chambliss, R-Ga.; and Ron Wyden, D-Ore.

Read the full text of the letter, after the jump…
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House passes Credit Cardholders’ Bill of Rights

The House today voted 312-112 to pass H.R. 5244, the Credit Cardholders’ Bill of Rights Act of 2008. The entire Bay Area delegation supported it.

Said House Speaker Nancy Pelosi, D-San Francisco:

“With the economic security of the American families in jeopardy, Democrats have been clear that we must insulate Main Street from the crisis on Wall Street. Central to our efforts is ending unfair lending practices by the credit card industry.

“For too long, the credit card industry has faced too few regulations and too little oversight. As a result, many Americans have become saddled with excessive credit card fees, sky-high interest rates, and unfair, incomprehensible agreements that credit-card companies revise at will. This legislation will put into law a number of regulations proposed by the Federal Reserve Board earlier this year that will help protect Americans from abusive lending practices.

“The Credit Cardholders’ Bill of Rights will provide working families with the fair lending laws they need, while ensuring that credit card companies can continue to make the loans on which many Americans rely. It is time to make sure that the market works for the American people with common-sense regulations of the financial services industries.”

And, from House Education & Labor Committee Chairman George Miller, D-Martinez:

“As most Americans know very well, credit cardholders increasingly confront problems stemming from the unfair practices of large credit card companies. High interest rates, outrageous late fees, ‘teaser’ rates, and inadequate payment periods drag many American families into debt and lower their credit scores. Unfair, incomprehensible agreements that credit-card companies revise at the drop of a hat complicate matters and add to the difficulties consumers have in managing their finances.

“I co-sponsored and voted today for the Credit Cardholders Bill of Rights to help consumers better manage their family finances and reduce their chances of being swindled by credit card companies. … With so many economic concerns facing our communities and our country, the last thing people need is deceptive practices by credit card companies to make things worse. Our bill is good for consumers and the economy and I urge the Senate to pass it as quickly as possible.”

Details of the bill, after the jump… Continue Reading