Senator Ben Allen (D – Santa Monica) has introduced legislation that will enable college graduates to refinance private student loans at more favorable rates from lenders. The ReLIEF Act (Loan Improvement for Enhanced Futures), SB 674, is co-sponsored by California State Treasurer John Chiang and the Service Employees International Union.
At a press conference Tuesday morning, Senator Allen and Treasurer Chiang explained how the legislation will create a $25 million fund to guarantee loans issued by private banks to refinance student debt. This fund will incentivize private lenders to issue loans at lower interest rates. The California Educational Facilities Authority (CEFA) chaired by Treasurer Chiang, would administer the program.
“Student loan debt has become a crushing burden for far too many young people,” said Allen. “The ReLIEF Act will create an incentive for banks to refinance high-interest loans at more reasonable rates. It’s a smart investment for the state, and will be a win for our economy.”
“Student loan debt is a toxin to the American dream. It prevents people from buying a home, starting a business or saving for retirement,” said Chiang. “College graduation is supposed to be synonymous with opportunity and prosperity and not a detour into a modern-day debtor’s prison.”
By allowing graduates to refinance their student loans, college graduates of all backgrounds will have more freedom to pursue their careers, as well as be able to save and invest in their own futures. The bill also extends eligibility to graduates of apprenticeship programs.
One such young professional, Tara Chandler, a social worker and member of SEIU Local 721 from Los Angeles, spoke at the press conference, “While I love working in a helping profession in which I am able to be of service and protect abused and neglected children, the burden of repaying the private loans I had to take out to afford my MSW education has me stuck living paycheck to paycheck. Obtaining the education we need should not require us to be trapped in long-term economic hardship.”
“This is a smart, careful, fiscally-prudent way to make a difference for a lot of people in this state who are living under ridiculous conditions just to afford a college education,” said Senator Allen.