Plan lowers student loan payments

WASHINGTON -- Sen. Sherrod Brown has a new plan to help Americans refinance to make costly private student loan debt more affordable.



In a teleconference call with reporters Wednesday, Brown outlined how his "Debt Swap" bill will help people reduce their debt by moving private loans to federal loans, at no cost to taxpayers.

"Ohio students shouldn't sign away their economic futures when they start college," said Brown, who noted the proposal would have no cost for taxpayers.

Brown, D-Ohio, gave a regional analysis of student loan debt in Ohio and difficulties faced by private borrowers.

More than 67 percent of Ohio college graduates carry debt. The latest figures, from 2007, show the state ranks in the top 15 for highest percentage of grads with debt.

According to Brown, 63 percent of Ohio's public college students graduated with at least $27,000 of loan debt while a quarter of those who graduated from private institutions carry debts averaging $22,700.

Nationally, the number of students with private loans, which have higher interest rates and are often more difficult to refinance than federal loans, has grown at a rate of 24 percent over the past decade.

The new legislation would cut interest rates in half, Brown said, resulting in lower monthly payments over the life of a loan.

In addition to private loans, he said students with Federal Stafford Loan debt, Federal Family Education Loan Program and Plus Loans of up to $31,000 (the current federal limit) are eligible.

"The length of terms to repay the refinanced loan are the same as federal loans existing today, with rates no higher than 6.8 percent," Brown said.

Brown likened the bill to the Higher Education Act of 1965, reauthorized in August 2008.

On a national level, the House is weighing whether to do away with federal subsidies for private student loans, replacing them with direct federal loans.

CitiBank, Wachovia, Bank of America and other lenders have yet to absorb the implications of the possible end of federal student loan subsidies and Brown's new "Debt Swap" bill.

In northeast Ohio, Mary K. Dean of Chase's student loans division declined to comment. She said the group has not had time to evaluate the proposed legislation.

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