In Washington D.C., recent action brought up new headlines about student loan refinancing legislation. A new legislative act has been announced, the bill is intended to reduce the mounting costs of higher education. Democratic party support for the new legislation is mounting. The United States Senator Richard Blumenthal, a Democrat from Connecticut, has vouched for The Reducing Educational Debt Act. There are three stipulations in the bill that the issues with education costs.
The Reducing Educational Debt Act does several different things. First, it eliminates tuition at two year community colleges. Second, it attempts to reduce Pell Grant losses through inflation adjustment. Third, it lets borrowers get lower interest rates on federal loans through student loan refinancing.
These stipulations are all meant to reduce the burden on students and new graduates. Tuition costs at community colleges are eliminated which creates viable options for many students in need of aid. The adjustment of the Pell Grants is meant to reduce the government loss on aid. The refinancing clause is significant. It allows borrowers to refinance their federal loans, so they can become eligible for new lower interest rates. This saves money on interest, and it helps borrowers focus on other financial moves.
Senator Blumenthal proposed his own measures in addition to these legislative moves: The Strengthening Forgiveness for Public Servants Act and The Make Student Grants Truly Tax-Free Act. The first of these acts makes it easier for public service workers such as teachers, policemen, and more receive debt relief. This act makes public servant jobs more enticing to new graduates, and it solves some of the shortcomings of the system. The second act completely cuts out taxes on low-income borrowers who take out federal grants or scholarships. Many students with exceptional need for assistance get slammed with a tax liability, but this issue is erased with this bill.
The economic standing of the new coming graduates into the labor market is in need of improvement.. There needs to be a trend of lower interest costs coupled with lower tuition which is one of the main goals of the topic legislation. These acts seek to address multiple different issues that factor into the entire student loan debt picture. With a comprehensive approach, a solution may not be as far away as originally thought.