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TALLAHASSEE (CBSMiami/NSF) — Meeting with college students and recent graduates dealing with the burden of student debt, U.S. Sen. Bill Nelson on Friday outlined legislation that would cap rates on federal undergraduate loans at 4 percent and allow the refinancing of older loans at lower rates.
In describing his bill on the Senate floor earlier this week, Nelson said the class of 2016 graduated with a national average of $37,000 in student loans.
“Instead of sending our graduates off to be creative and conquer the world, we’re sending them with a tremendous amount of debt that they are struggling to afford,” Nelson said.
The Democratic senator also noted the federal government raised the interest rate on undergraduate loans from 3.76 percent to 4.45 percent on July 1 for loans issued in the coming academic year.
Under Nelson’s bill, interest rates on undergraduate loans would be capped at 4 percent. Graduate loans would be capped at 5 percent. And loans arranged by parents would be at 6 percent.
The legislation would also lift a prohibition against refinancing older loans, allowing students who have high-interest loans to refinance them under the caps. The bill would also eliminate a loan origination fee that the federal government charges.
“What we are trying to do is to make this more affordable and uniform,” Nelson said. “Now, if somebody says, `Well, that means that the government is going to subsidize when the rate goes higher than 4 percent,’ then that’s right. Why? Because to have an educated workforce is in the interest of the country.”
Nelson’s remarks came during a meeting in Tallahassee with six students who attend or recently graduated from Florida State University or Florida A&M University.
The students all described facing debt loads of more than $30,000, with interest rates as high as 6.8 percent.
Louis Baptiste, who graduated from Florida A&M and earned a law degree from Florida State, said he is employed at a Tallahassee law firm but faces more than $100,000 in loan repayments.
“The student loan debt, it’s real for me because right now I’m in the process of buying a home,” Baptiste said. “But the loan debt is actually preventing me at the current time from buying a home.”
Nelson said student loan debt, which tripled from $531 billion in 2006 to $1.3 trillion a decade later, is second only to home mortgage debt.
“You can take all the credit card loans in the entire country and it’s not as much debt as student loan debt,” Nelson said. “It tells you the enormity of the situation.”
Nelson isn’t the only Florida lawmaker interested in helping ease the loan burden on students. U.S. Sen. Marco Rubio, R-Fla., and U.S. Sen. Mark Warner, D-Va., have filed a bill that would limit loan repayments to 10 percent of the student’s annual income, with a $10,000 offset.
For instance, a graduate who had a job paying $40,000 a year, would not have to make more than $3,000 in loan repayments, which represents 10 percent of $30,000.
Nelson called the Rubio-Warner legislation “a good idea” and said it could be incorporated in the loan reform package.
On other topics Friday, Nelson predicted the latest U.S. Senate health-care legislation, which seeks to repeal and replace Obamacare, is not likely to pass the chamber.
“I think it’s dead,” Nelson said. “I think there are going to be some broken Senate Republican arms, but they’ve got two (senators) against. They can’t afford another senator (to oppose the plan).”
Citing Medicaid cuts and the elimination of health-care coverage for “millions of people,” Nelson called the measure “just as bad” as earlier versions of the legislation advanced in Congress.
Nelson also said President Donald Trump should disband a “voter-integrity” commission after most states refused to turn over voter information to the federal panel.
“Why should the federal government collect every state’s information in one place so anybody that wants to go and hack that information, it makes it so easy for Vladimir (Putin) to suddenly go in and find out all kinds of personal things,” Nelson said.
(The News Service of Florida’s LLOYD DUNKELBERGER contributed to this report.)