Congressman Vargas Declares Californians Will Benefit from Action to Make Student Debt More Manageable

Washington, DC - Today Congressman Vargas announced that 423,536 borrowers in California will benefit from the executive action President Obama took yesterday to give up to five million additional borrowers the ability to cap their student loan payments at 10 percent of their monthly income, according to a report released today by the Domestic Policy Council and the Council of Economic Advisers. 

The President’s executive action opened this repayment option to millions of borrowers who were previously ineligible, including many borrowers with older loans.

Under the President’s action, for example, a teacher earning about $39,000, with student debt of $26,500, would be able to reduce her payments by more than $1,500 a year, compared to the standard repayment plan.

“The crushing burden of student loan debt is hurting our economy and holding back a generation of young Americans,” Rep. Vargas said.  “This action by the President will help make student debt more manageable for millions of borrowers, including young graduates seeking to start a family, buy a home, start a business, or save for retirement."

In addition to the President’s action, more must be done.  Rep. Vargas also announced that 2,328,000 borrowers in California would benefit by being able to refinance their student loans at lower interest rates if Congress passes the Bank on Students Emergency Loan Refinancing Act (S. 2432; H.R. 4582), according to today’s report by the Domestic Policy Council and Council of Economic Advisers.  The Senate is scheduled to hold a cloture vote on the bill (S. 2432) on Wednesday, June 11.

The Department of Education estimates that, if passed, 25 million borrowers would take advantage of the student refinancing legislation and refinance their existing student loans to lower interest rates, similar to those that are currently available to new student loan borrowers.  Under the bill, a typical participating borrower would save $2,000 over the life of his or her loan.

“College graduates across the country are putting their dreams on hold as they struggle to pay off their student loans,” Rep. Vargas concluded.  “I applaud the action the President took yesterday, but more is needed.  I call upon both the House and Senate to pass the Bank on Students Emergency Loan Refinancing Act immediately.  Current law prevents millions of hard-working, responsible borrowers from refinancing their student loans at today’s low rates, the way that people can refinance their home and auto loans.  This critical legislation is simply fair - it finally gives borrowers with existing student loans the same option to refinance that millions of other borrowers already have.”

For the full report prepared by the Domestic Policy Council and the Council of Economic Advisers, click here.

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