Senate proposal to refinance student loans

CAPE GIRARDEAU, MO (KFVS) - College students and parents get ready to dole out some more cash for a college education.

On Wednesday we learned the interest rate on U.S. government-backed Stafford Loans is set to rise by 1% this coming school year.

That adds up to about $46 more per year for every $10,000 borrowed by an undergraduate.

Those interest rates are going up, but what about the interest rates for money that has already been borrowed?

Federal lawmakers just introduced legislation that would allow borrowers to refinance loans taken out years ago.

There's a lot of responsibility that comes with graduating college.

It often means financial independence and that translates to getting a job, paying bills and setting a budget.

Students at Southeast Missouri State University say paying back student loans is just an added financial burden.

So lowering those interest rates could go a long way.

"I feel like the government should have something to help students," said junior Carissa McDonald. "Because it is quite a burden. It's hard to get a job right after graduation so it's really hard to pay off loans off a minimum wage job. So I feel like the government should probably do something."

And members of Congress are trying to do just that.

Senator Elizabeth Warren recently introduced a bill that would allow the millions with student loans to refinance at a lower rate.

"It's a little worrisome because it keeps building up every semester so you have a lot to deal with once you graduate," said McDonald.

According to the Institute of College Access and Success, the average debt from student loans for the Class of 2012 is more than $29,000.

The proposal would allow those with existing loans that have an interest rate around 7% to refinance at the current rate for undergraduates, 3.86%.

SEMO senior Dalton Webb says that's a good start.

"That lower finance rate plus having that one payment for one person instead of multiple places to pay for," he said.

We did some research to see how much debt students in the Heartland are dealing with

These are numbers from our 4 local universities.

These estimates assume that a student lives in state, lives in the dorms all 4 years of school, and takes 15 hours of classes each semester.

So, assuming a student doesn't get any scholarship or grant money during their time in school, a student at Southeast Missouri State would have to take out a little over $60,000 to pay for tuition, fees, books, and room and board.

Student loans are second only to mortgage as the largest debt consumers carry

Senator Warren would pay for her proposal with a tax increase on wealthy Americans.

The bill is co-sponsored by more than 20 fellow Democratic Senators including Illinois Senator Dick Durbin.

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