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Senate blocks student debt refinancing bill

Posted by Tom Walker in ,

In a continuation of StuRents' review of student debt in the US and policies and politics surrounding the sensitive issue, the US Senate has failed to achieve the 60% majority vote to support legislation allowing people to refinance their student loans. The news follows President Obama's announcement this week in which he ordered executive action to let more borrowers cap their monthly payments at 10 percent of their income, and in which he also hailed education as "the single best investment you can make in your future."

The Republican Senators blocked the bill that would have enabled millions of indebted Americans to renegotiate the interest rates - some of which exceeding 7% - on their student loans with the lower rates now prevalent across the economy.

The bill, which Democrats claim would have saved millions of borrowers $2,000 each over the lifetime of their loans, would have been financed by the Buffet Rule, a tax legislation sponsored by the 'Sage of Omaha' that sets minimum tax rates on individuals earning in excess of $1million.

The Republican party claimed, however, that Democrats were merely supporting the bill as a way of rallying the populist vote in the lead up to the mid-term elections, where Democrats risk losing the coveted Senate majority.

Student debt in America totals $1.2 trillion -the second largest source of consumer debt after mortgages - making it a hot topic for those in political circles. However, it remains uncertain whether or not Washington's intransigent politicians will manage to strike a compromise on the issue. Unfortunately, what is clear is that the rapidly growing levels of US student debt need to be tackled head on to ensure they don't drag down an already delicate economic recovery.

Image courtesy of Flickr, Creative Commons