RICHMOND, VA (WWBT) - Do you have high interest student loans you're struggling to pay? Two state legislators want to help you refinance your debt at a lower rate through a Student Loan Refinancing Authority.
Two companion bills to establish this were just continued until next year, but they're not dead. It's a step toward trying to make this idea work for next year.
State Delegate Marcus Simon (D - Fairfax) has been getting an earful from Virginians who are swimming in high student loan payments.
"We heard from a woman who graduated 15 years ago and had to take a forbearance during the recession," said Simon.
So Delegate Simon and Senator Janet Howell (D - Reston) both proposed companion bills to create the Virginia Student Loan Refinancing Authority.
"Virginia had something like this, the Virginia Education Loan Authority from 1972 to 1997," explained Simon. "So our proposal is essentially to bring back VELA."
Here's how it would work: the state would fund the loans by selling tax-free municipal bonds. Then Virginia residents who attended colleges in Virginia could apply to refinance their federal student loans through the Authority at a lower interest rate. But you will need good credit to qualify.
"This isn't for folks that are in default," said Simon. "This isn't about forgiving people's loans. Everyone who participates in this program will have to pay back 100% of what they owe."
But Simon believes this could help up to 630,000 Virginia borrowers, and help the economy.
"A lot of them could start saving for a down payment on a house, or finally upgrade and get that new car they've been looking for," he said.
It's not a new idea. Rhode Island, Minnesota, Maine, North Dakota, California and Connecticut have already passed similar laws, and Wisconsin is considering it as well.
In a separate bill, Simon also proposed creating a student loan ombudsman and requiring student loan servicers to be licensed by the State Corporation Commission.
So what happens next? Now the people and organizations involved will study these ideas over the next year. The bills will be proposed again in next year's General Assembly session.
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