Fiscal Cliff Looms as Federal Government Looks For Ways to Make Student Loans More Affordable and Easier to Refinance
Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
With another fiscal cliff in sight, the federal Consumer Financial Protection Bureau is looking for ways to make student loans more affordable and easier to refinance.
The drop-dead date is July 1, 2013, when the interest rate on student loans jumps from 3.4 percent to 6.8 percent.
Sen. Elizabeth Warren, D-Mass., introduced a bill June 5 that would allow students to pay a much lower interest rate for one year. It would be equal to the rate that banks pay when they borrow from the Federal Reserve, about 0.75 percent. Warren said that this one-year period would give Congress time to figure out a long-term plan on interest rates.
Here are the student loan debt numbers from the federal Consumer Financial Protection Bureau:
- $1.1 trillion: The approximate amount of outstanding student loan debt, second only to mortgages in household debt.
- 1 in 5 U.S. households owes money on a student loan.
- $26,682: Average outstanding balance for a borrower with student debt.
- 1 in 8: Share of borrowers who have more than $50,000 in student debt.
- 40 percent: Share of American households headed by someone under 35 who has student loan debt.
25 percent: Share of borrowers under 30 who spend more than 10 percent of their income on student loan payments.
6.7 million: Number of borrowers who are more than 90 days delinquent on their student loans.
31 percent: Percentage increase in the number of student loan borrowers from 2007 to 2012.