Senator Dick Durbin visited campus Thursday to push a new bill that would make it easier for college grads to pay back their loans, even as he touted Illinois State’s “spectacular” track record on student debt.
Joining Durbin at Thursday’s event were Illinois State President Larry Dietz and two recent alumni who voiced support for the bill, which would allow student loan holders to refinance their debt at lower interest rates.
Many borrowers have undergraduate student loans with interest rates of 7 percent or higher. The bill, cosponsored by Durbin, would allow borrowers with federal FFEL loans or Direct Loans taken out prior to July 1, 2013, to refinance at 3.86 percent for undergraduate Direct Loans, 5.41 percent for graduate loans, and 6.41 percent for PLUS loans taken out by a student’s parents. Private loans would also be eligible to refinance.
Durbin, an Illinois Democrat, called it “common-sense legislation” that will help millions of borrowers. Teenagers sometimes don’t understand the full scope of their future debt when they take out the loans, he said, and student loan debt is unique in that it can’t be shaken off in a traditional bankruptcy.
“Too many of these students are being sucked into a trap of debt that they can’t even imagine,” he said.
Shiann Poshard ’14 graduated in May and got a teaching job in Eureka. The first-generation college graduate took on around $30,000 in student debt, despite working her way through school.
Standing at Durbin’s side during Thursday’s event, Poshard praised the debt-refinancing bill and said it would be “super helpful” to her and her new fiance, if enacted.
“That debt ties us down,” she said. “That debt limits my options.”
Also supporting the bill Thursday was Mesha Garner ’12, who also just finished a master’s degree in political science. She took on debt during her six years at Illinois State; her interest rates are around 6.8 percent.
“It would be hard to make those payments and to start a life for myself,” Garner said.
Nearly one-third of Illinois State’s spring graduates left without any college debt. For the rest of them, the average debt is close to $26,000–less than the national average for a public university. And only 3.6 percent of Illinois State alumni default on their loans, significantly lower than state and national averages.
“Still, rising student loan debt and the interest on that debt is a growing state and national problem, and we are very proud that Senator Durbin is working to address that issue,” Dietz said Thursday.
Nearly 8 in 10 Illinois State students receive some kind of financial support, from grants, scholarships, loans, or campus jobs. In 2013, students received about $238 million in financial support.
“(Its low default rate) says that ISU is working hard to keep student debt as manageable as they can and also prepare students for the life ahead,” Durbin said. “The story here at ISU is an excellent one.”
The Bank on Students Emergency Loan Refinancing Act was introduced by Senator Elizabeth Warren from Massachusetts and would be paid for through higher taxes on the wealthiest Americans.
Durbin says Congress will begin debate on the bill next week.
Ryan Denham can be reached at rmdenha@IllinoisState.edu.