Sep 22 2015
North Dakota Students Have among the Highest Rates of Indebtedness in the Country – 83 Percent Graduate with Debt
WASHINGTON, D.C. – To help North Dakotans saddled with private student loan debt, U.S. Sen. Heidi Heitkamp today introduced a bill that could enable borrowers to refinance private education loan balances at reduced interest rates at no cost to taxpayers.
Nearly 70 percent of college seniors in 2013 required loans to afford the skyrocketing price of college, and many are turning to private education loans – which often have higher interest rates than federal loans. Long an advocate for affordable college, Heitkamp introduced the legislation to better support students by enabling them to refinance private student loans, as borrowers of such loans can be ineligible for options like deferment, income-based repayment, or public service loan forgiveness.
North Dakota students have some of the highest rates of indebtedness in the country: 83 percent of the class of 2011 graduated with some form of debt – more than any other state that year. On average, North Dakota students graduate with more than $27,000 in debt, which can force some students to use private education loans as additional assistance. Student loan debt across the U.S. has topped $1.3 trillion, surpassing credit card and auto loan debt. Of that debt, $150 billion is in private education loans. Private loans not only often carry higher interest rates, but can include hidden fees, and lack the safeguards provided by federal student loans. Heitkamp’s Private Education Loan Modification Act would work to address those issues and provide potential refinancing options for reduced interest rates.
“North Dakota’s young people deserve every opportunity to succeed – but with more than a trillion dollars in student loan debt nationwide, we have a serious problem on our hands. I’ve heard from countless students and families in North Dakota about struggles with debt. It prevents far too many young North Dakotans from moving ahead in life by burdening them and their families often for decades. That doesn’t just hurt students and families – it hampers our state’s economy, too,” Heitkamp said. “With my bill, I’m trying to make it easier for students to refinance private education loans at today’s low interest rates, so they can pay down their debt and start off on the right foot when they graduate. North Dakotans shouldn’t have to choose between paying the interest on their education and buying a home.”
Heitkamp’s bill would establish debt refinancing mechanisms aimed at providing relief to private student loan borrowers by:
- Eliminating Inefficiency: Authorizing the U.S. Department of the Treasury to find creative solutions to eliminate inefficiencies in the private education loan market.
- Providing Refinancing Options: Accommodating and providing information on refinancing opportunities for private student loan borrowers whose debt obligations represent a disproportionate share of their income.
- Encouraging Innovation: Spurring greater competition among private lenders by incentivizing innovation and participation in the refinancing market.
- Strengthening Effective Oversight: Requiring a report to develop best practices that guarantee effective oversight mechanisms are established.
Conversations with North Dakota students and families have reinforced Heitkamp’s commitment to tackling rising student debt. Heitkamp has been an outspoken advocate for debt relief for students in the U.S. Senate. The bill Heitkamp introduced today is similar to a bill Sen. Heitkamp cosponsored in 2013.
In March, Heitkamp supported an amendment to the Senate budget resolution that would make college more affordable for middle-class families by allowing borrowers with outstanding federal and private student loans to refinance at the interest rates approved for new borrowers. And, during recent Senate Committee on Banking hearings, on which Heitkamp sits, she made the case repeatedly for helping North Dakotans with existing student loan debt have the opportunity to refinance at affordable interest rates.