The high cost of going to college is the subject of legislation proposed by U.S. Sen. Bill Nelson, who was at the University of West Florida Friday morning.
According to Nelson, student loans are the second-largest debt in America, only behind home mortgage debt.
“And if you took all the credit card debt in the entire United States combined, student loans are larger than that: $1.3 trillion,” said Nelson.
More than 43 million Americans currently have outstanding student loan debt. In Florida, students graduating with a four-year degree leave campus with an average of $24,000 in loan debts.
Nelson met with a group of local graduates at UWF, to discuss the bill filed this week, aimed at cutting student loan interest rates and allowing borrowers with existing student loans to refinance to the new rates.
“People say, ‘Well, why do you want to this? This is going to cost the federal government more money,’” said Nelson. “Our ability to stay competitive globally is going to be by our ingenuity and our creativity. In order to do that, you’ve got to have an educated workforce.”
The legislation comes after the federal government increased rates for new federal student loans from 3.76 percent to 4.45 percent, which went into effect on July 1. If approved, Nelson’s bill would, among other things, permanently cap federal student loan interest rates.
“For undergraduates, keep the cap at four percent,” Nelson said. “For graduate students at five percent, and for parents that pay off the loans, at six percent. That’s a cap; you can go lower than that.”
The bill also would allow students to re-finance their existing loans at that rate.
Erin Percifull was one of the students in the roundtable discussion. She told the Senator that while she has no debt from her undergraduate degree, she does have about $80,000 in student debt from earning her master’s at Colombia University.
“[A] combination of different student loans,” said Percifull. “The interest rate on those range from 5.2 percent; there’s 6.2 percent and 7.2 percent.”
For Amy Newburn, who’s Assistant Director of the Haas Business Center, it’s been a matter of paying on the interest of her loans while the principal remains virtually untouched.
“I’ve been paying for four years, and my principal has decreased less than a thousand dollars,” Newburn said. “Talk about disheartening.”
In addition to capping student loan rates, Nelson’s bill would also eliminate the “loan origination fees” charged to students to process their loans. These fees are often taken out of a student’s original loan amount before they receive it.
“If you take out a $10,000 student loan you don’t get ten thousand because they take out an administrative fee, say it’s $200,” said Nelson. “Then what you end up getting is $9,800, not $10,000. But, you are paying [interest on] a student loan that’s $10,000.”
Nelson held a similar roundtable Wednesday in Orlando, where he said the fate of his bill could hinge on what kind of price tag is placed on it by the Congressional Budget Office.