Last week, I heard from Lynsay Spratlen, a Macedonia native and Ashland University graduate who is working at a tech firm in Summit County. Like many recent college graduates who see most of their income going to pay off high-interest private student loans, Lynsay lives with her parents.
Even though new graduates are entering into a better economic climate and better job prospects, their heavy debt burden means fewer of them can afford to buy a home, start a business or continue on to graduate school.
Historically, higher education leads to higher wages. Today, however, higher education also means higher levels of debt. Student loan debt now exceeds $1 trillion - more than credit card debt and more than auto loans. In fact, student loans are second only to mortgage debt in this country.
According to the Wall Street Journal, the average borrower earning a bachelor's degree in 2013 has $30,000 in student loan debt.
Last month, I discussed the importance of subsidized Federal Direct Stafford Loans for families making less than $40,000 a year. And today, we must act to stop the interest rate on those loans from doubling - from 3.4 percent to 6.8 percent. That's why I introduced the Student Loan Affordability Act, which would keep college affordable for more middle-class and low-income students.
However, while the Student Loan Affordability Act bill is critical for current and future borrowers, it doesn't address the private loans students turn to because federal loan limits too often don't cover the full cost of books, room and board, fees and tuition.
Keeping Stafford loan rates low won't help relieve the burden facing current borrowers. Today, there are 2.9 million students with more than $150 billion in private student loan debt. More than 80 percent of undergraduates with high student debt - those with more than $40,000 in debt - have private loans.
Private loans typically have higher interest rates, rates that can top 18 percent. While federal student loans offer repayment plans based on a borrower's income and allow borrowers to defer payments if they are facing difficult times, private student loans give borrowers very few options.
That's why I introduced legislation last week to help stop the fleecing of college graduates who are stuck under a mountain of private student loan debt. My Refinancing Education Funding to Invest for the Future Act would address this problem by authorizing the Treasury Department to make the private student loan market more efficient.
After all, why should our students and graduates be the last to benefit from historically low interest rates? By refinancing homes, homeowners have been able to free up money for other, more productive uses than simply servicing their debt. My bill would allow borrowers with private student loans to refinance their costly private loans into more affordable loans. These borrowers could see their interest rates cut in half, lowering their payments at no cost to taxpayers.
By passing this legislation, we can help students, such as Lynsay, pay down their debt and start making plans for the future.