Florida U.S. Senator Bill Nelson filed legislation Monday to cut student loan rates across the board and allow borrowers with existing student loans to refinance to new lower rates.
U. S. Senator Bill Nelson (Photo: AP)
On July 1, federal student loan interest rates for undergraduate students increased from 3.76 percent to 4.45 percent. If approved, Nelson's bill would cap rates for undergraduates at 4 percent, and allow borrowers with existing student loans that have a rate higher than 4 percent to refinance their loans to the new lower rate - a move that is currently barred under existing law.
Officials say more than 43 million Americans currently have outstanding student loan debt. In Florida alone, figures indicate that students graduating with a four-year degree leave college with more than $24,000 in student loan debt on average.In addition to capping student loan rates, Nelson says his bill would also eliminate the "loan origination fees" charged to students to process their loans.
These fees are often taken out of a student's original loan amount before they receive it. Nelson's bill would eliminate the fee altogether.In addition to capping undergraduate rates at 4 percent, Nelson says the legislation would cap rates for graduate students at 5 percent and the rates for parents of undergraduates at 6 percent.
Nelson says capping interest rates, ending loan origination fees and allowing borrowers to refinance existing loans would help to make education more affordable for Florida students.Nelson's measure comes even as a new state law takes effect regarding student loans.
The new Florida law, which applies only to federal loans, requires colleges and universities here to give students annual reports that detail how much they have borrowed, along with the anticipated total loan amount and the monthly payments.
The sponsor of the Florida measure compared it to providing students with the same kind of information people would get when taking out a loan to buy a home or a car.