Should we be able to refinance student loans?
Student debt has been a major topic of conversation in recent years as the amount of student debt in the nation has become the largest pool of debt in the country. Overtaking even credit card debt, more than 37 million Americans have student debt and many of those borrowers are struggling with delinquency and default.
In general, borrowers in the United States are saving a substantial amount of money by taking advantage of these historically low interest rates on mortgages, consumer debt, car loans, and other similar types of debt. One estimate shows a typical household saving a little more than $3,000 each year on interest, compared with interest rates dating back to 2007. Much of these savings comes from lower mortgage interest rates, which have decreased by 30 percent.
While these interest rates have been decreasing and many borrowers have been able to refinance large amounts of their debt, people with student loans are still waiting for some type of relief. Most readers are familiar with the increasing cost of higher education and the burden this is putting on America’s young people, and interest rates are a large part of that burden.
With interest rates fixed mostly by the federal government and no opportunity to refinance, student debt borrowers are often stuck between a rock and a very expensive loan payment each month.
As many people know, in addition to being unable to refinance student debt, borrowers are also unable to have the debt relieved during a bankruptcy proceeding. This means that an addition to having an average interest rate that is more than double the average rate for a mortgage, there is also no relief in sight for borrowers who are not earning enough to make a substantial dent in their debt.
Source: Time, “Why Can’t People with Student Loans Refinance at Better Rates?” Dan Kadlec, Feb. 20, 2013
More information about student debt and debt relief options can be found on our Atlanta bankruptcy site.