Posted at: 05/19/2013 1:28 PM
Updated at: 05/19/2013 1:41 PM
U.S. Sen. Kirsten Gillibrand is hoping to relieve the debt burden of millions of students who have borrowed to pay for their education - especially New Yorkers, who average nearly $30,000 in student debt.
The New York Democrat announced Sunday the Federal Student Loan Refinancing Act, a bill that would lower interest rates for many student borrowers currently repaying their federal student loans.
"More city graduates and middle class families are burdened by student loans than ever before and are struggling to repay a higher amount of debt than ever before," Gillibrand said in a statement. "Our young people should be able to refinance in the same way that our businesses and homeowners do."
The refinancing bill would enable students and graduates who have an interest rate above 4 percent to refinance their federal loans at a lower, fixed rate of 4 percent. Gillibrand said she will introduce the bill in the Senate this week.
Most federal student debt is set at an interest rate higher than 6 percent, Gillibrand said. There are 2.7 million borrowers in New York and 37 million nationwide.
Gillibrand said her bill would lower interest rates for nearly nine in 10 federal student loans nationwide.
There is an estimated $1 trillion in student debt nationwide.
In addition to her legislation, Gillibrand said Sunday she would push to stop interest rate hikes set to go into effect in July for federal Stafford loans. Those rates are set to double to 6.8 percent in July.
In New York, more than 422,000 students have borrowed through Stafford loans, Gillibrand said.
She said she would propose closing tax loopholes, including corporate offshore tax loopholes, to fully pay for a Senate bill that could freeze need-based Stafford loans at 3.4 percent for two years.