Senate Majority Leader Harry Reid (D-Nev.) on Monday set up the first procedural vote to advance a student loan-refinancing bill.
The vote to end debate on the motion to proceed will likely occur on Wednesday.
Sen. Elizabeth Warren (D-Mass.) authored S. 2432, the Bank of Students Emergency Loan Refinancing Act, which would allow the nearly 40 million people with more than $1 trillion in student loan debt to refinance to today’s lower interest rates. She would pay for the bill by imposing a minimum tax rate on millionaires.
The Congressional Budget Office (CBO) determined that allowing former students to refinance their loans would cost $51 billions, but the tax increase on the wealthy would fetch $72.5 billion in revenue for the federal government, meaing a $20 billion net gain.
Democrats argue that allowing borrowers to refinance student loans to a lower rate, the way people currently can with car loans and mortgages, would give the middle class a “fair shot” and free up funds that could be put to better use elsewhere in the economy.
“Crushing student loan debt is keeping many young people from moving out of their parents’ homes, from saving for a down payment, from buying homes, buying cars, starting small businesses, saving for retirement, or making the purchases that grow our economy,” Warren said. “It doesn’t have to be this way.”
— Peter Schroeder contributed to this article.