BOSTON — U.S. Sen. Elizabeth Warren is trying to stir up support for her student loan bill ahead of an expected vote in the Senate next week.
Warren’s bill would let college graduates with existing federal student loans refinance those loans at the lower interest rates now offered to new borrowers.
To help pay for the program, Warren’s bill would also phase in a new minimum tax in 2015 for individuals with adjusted gross income between $1 million and $2 million.
On Monday, Warren and U.S. Rep. John Tierney, a fellow Massachusetts Democrat who has sponsored a similar bill in the House, are planning to attend a White House event where President Obama is expected to address the issue of college affordability.
A Congressional Budget Office report released this week concluded the student loan refinancing portion of Warren’s bill would increase federal spending by about $51 billion from 2015 to 2024 while the tax portion would increase revenues by about $72 billion.
On balance, the report estimates that the bill would increase deficits through 2019 by about $19 billion but reduce them over the longer term, 2015 to 2024, by about $22 billion.
The report also estimates that there is about $1 trillion in outstanding federal student loans or loan guarantees, and more than $100 billion in outstanding private student loans.
Democrats are trying to make education a key issue during the midterm elections, but Warren’s bill likely faces tough opposition from Republican lawmakers, who oppose tax increases. That makes the legislation a tough sell in the Republican-controlled House.
Warren’s office said the Senate could vote on the bill Wednesday.
The Massachusetts Democrat has tried to stoke support for the bill by appealing to unions and student groups. She’s also urged graduates to tweet photos of themselves and talk about the toll debt is taking on their lives.
“It’s keeping young people from buying homes, starting families, starting small businesses and growing our economy,” she said in a post online. Warren said the bill has 35 Senate co-sponsors.
She said when Republicans and Democrats approved lower interest rates on new student loans last year, they didn’t help those stuck with older debt.
Among those graduates targeted by Warren’s bill is Alana Eichner, a 23-year-old who studied government at a women’s college in New England and owes about $15,000 in loans.
“The burden of loan debt presents an obstacle in determining everything from where to live to which job to take,” Eichner said. “This bill would give my friends and I refinancing options that we don’t currently have to make student loan repayment more manageable.”
Tierney has said a graduate who borrowed the national average of about $30,000 through unsubsidized federal loans to pay for their undergraduate education would save more than $4,000 in interest payments by refinancing under the bill.
The Congressional Budget Office report also estimated that less than 10 percent of federal student loan volume is in default. While the bill wouldn’t prohibit borrowers from refinancing federal loans in default, the report said most federal borrowers in default would likely not refinance.
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