Is Student Loan Reform Good News for Federal Loan Borrowers?
If Senator Elizabeth Warren of Massachusetts gets her way, there will be good news on the horizon for federal student loan borrowers. Warren recently announced on her blog that she will be introducing new legislation to allow graduates with high interest rate student loans to refinance those loans at rates “at least as low as those now being offered to new borrowers in the federal student loan program.” Warren points out that “when interest rates are low, homeowners can refinance their mortgages. Big corporations can swap more expensive debt for cheaper debt. Even state and local governments have refinanced their debts.” But student loan borrowers cannot currently refinance their debt at prevailing interest rates through any existing federal program. The current federal student loan consolidation program allows borrowers only to lock in a weighted average of all of their existing interest rates, not necessarily get themselves a lower interest rate.
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