His “debt swap” bill would help people reduce their student loan debt at no cost to taxpayers.
“Ohioans could see their interest rates cut in half because of this bill,” he said.
In 2007, 63 percent of Ohio graduates at public colleges finished school with an average debt of $21,458, and 75 percent at private colleges finished with an average debt of $22,737, according to the Institute for College Access and Success.
“Last year, I received a letter from a mother whose daughter had borrowed $21,000 for college,” Brown said. “She’s then facing more than $102,000 in debt because of outrageous interest fees.”
About 3.3 million students nationwide are attending college through private loans, a 24 percent increase since the 1999-2000, according to Brown.
Private loans typically have higher interest rates, some topping 18 percent, and offer fewer payment options than loans administered by the U.S. Department of Education, he said.
Last year, Congress increased the federal loan limit by $8,000, to $31,000 for undergraduate degrees.
Under Brown’s “debt swap” bill, people with private student loans who were eligible for the federal Stafford program but did not utilize their full allowance could refinance into low-interest, unsubsidized Stafford loans, which carry a 6.8 percent fixed interest rate.
These new “debt swap” loans would be administered by the federal government under the same terms and conditions as other federal student loans.
The “debt swap” proposal would not cost taxpayers because unsubsidized Stafford loans generate a small amount of revenue, according to the Congressional Budget Office.
If passed by Congress, Brown’s bill would apply only to private student loans made before July 1, 2010. The window to get a debt swap loan would close on July 1, 2011.
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