A bill introduced at the Minnesota Legislature this session could make it easier for students to pay their college loans — but it may not get much of a chance during this year’s “unsession.”
Sen. Greg Clausen, DFL-Apple Valley, introduced a bill that would allow students to refinance their student loans by having the state Office of Higher Education take over their private and federal loans.
“This is one of the higher priorities [for the Senate Higher Education Committee], and I know it’s a high priority for parents as well,” Clausen said.
By refinancing loans, qualified applicants could potentially change their interest rates, payment plans and co-signers, said Tricia Grimes, financial aid borrowing data researcher for the Office of Higher Education.
“This would give borrowers another option,” she said. “Particularly if they want to change what’s going on with their private loans.”
Borrowers — or their co-signers — must have high enough credit scores and incomes after they graduate to qualify for the new program, Grimes said.
North Dakota, South Carolina and Maine have similar programs, and the Wisconsin Senate has introduced a refinancing bill this year, too.
Starting a conversation
University of Minnesota veterinary biosciences Ph.D. candidate Jeffrey Hall was nearly $40,000 in debt at the end of his undergraduate career.
He said he would’ve liked to refinance his loans to potentially improve his interest rates and have more time to pay.
“If the state were to take care of that and allow me to consolidate, that would save me a substantial amount of money,” he said.
But bill co-author Sen. Terri Bonoff, DFL-Minnetonka, said the bill could face problems this session because legislators are focusing on eliminating unnecessary laws and updating language.
Still, Clausen said the proposal sparks a good conversation about how the state can help students pay for their higher education.
“We know that education is a real economic engine that drives our economy,” he said.
Director of the University’s Office of Student Finance Kris Wright said that although the proposal doesn’t help the institution combat student debt as a whole, it would benefit students individually.
“I think it offers a good chance for students and parents who have private loan debt to consolidate that into more favorable state-based terms,” she said.
The Senate’s Higher Education and Workforce Development Committee heard the bill earlier this month. It currently sits in the Finance Committee.
Bonoff said the bill is a step in the right direction to alleviate debt, but there’s more that the state can do to help students.
“I think it’s one tool, and we need to employ every tool we can,” she said.
Minnesota Student Legislative Coalition Chairman Matt Forstie agreed. He said that although the bill will not terminate student debt entirely, it will help.
“It’s not just important to students,” he said. “It’s important to our generation.”
