Tester tells federal government student loans need improvement
Senator: ‘Why should investing in a degree cost nearly twice as much as putting a roof over your head?’
(U.S. SENATE) – With the 30-year mortgage interest rate around four percent and the government borrowing rate at 3.5 percent, Senator Jon Tester has a simple question: why is the average federal student loan rate seven percent?
Tester is answering the question by supporting the Federal Student Loan Refinancing Act. The bill will save students money by allowing borrowers with existing federal student loan rates above four percent to consolidate their loans and refinance at a fixed four percent rate.
Currently, 137,000 Montanans have outstanding federal student loans and owe an average of $22,320 each. Nationwide, total student loan debt is $1.2 trillion.
“A good home and a good education are the building blocks for a healthy, prosperous life,” Tester said. “So why should investing in a degree cost nearly twice as much as putting a roof over your head? My bill levels the playing field, opens more doors for folks willing to work hard to get a good education and puts more money in folks’ pockets.”
Tester’s bill, which is co-sponsored by fellow Montana Senator John Walsh, would not impact students who have loans with interest rates below four percent.
Borrowers who reduce their debt have more money to spend on goods and services, strengthening the economy. Studies show 40 percent of graduates with college loans delay making a major purchase like a house or a car because of school debt.
Tester previously helped pass the Bipartisan Student Loan Certainty Act that lowered rates for new, federally provided Stafford Loans for undergraduate students to 3.86 percent this year. It also places caps on individual student loan rates.