RICHMOND, Va., Jan. 20 (UPI) -- A bipartisan group of Virginia lawmakers are pushing legislation that would allow student loan borrowers to refinance education loans and bolster consumer protections for borrowers.
The initiative, which would be backed by state-issued bonds, could help the some 1 million Virginia residents who owe more than $30 billion in student loans, just a fraction of the $1.3 trillion owed nationally.
The program is being modeled after those in other states, including Rhode Island. Tuesday, lawmakers began discussing proposed legislation that also includes a borrowers' bill of rights. Refinanced student loans offer lower interest rates, allowing for lower total repayment costs.
"We have an opportunity to stimulate the Virginia economy, improve people's lives, raise their standard of living, reduce default rates -- all at no cost to Virginia taxpayers," Democratic Del. Marcus Simon said. "The question shouldn't be whether we ought to take steps to address the student loan debt crisis this session, the question should be why we aren't doing it already."
Rhode Island developed its student loan refinancing program about two years ago. So far, it has refinanced loans for fewer than 400 borrowers. With a fixed rate as low as 4.24 percent, most enrolled have seen a dramatic decrease in payments. The program requires borrowers earn at least $40,000 a year and have a FICO credit score of at least 680.
Virginia lawmakers said allowing borrowers to refinance student loans would have a trickle-down benefit on the economy, allowing consumers to spend elsewhere.