With Ohio graduates of four-year public and private institutions facing an average debt of about $26,000 each, Ohio Sen. Sherrod Brown is proposing legislation that would ultimately make it easier for students to pay off student loans.
“While you always sense at a graduation the inspiration … achievement and the accomplishment, you sense more today than five years ago anxiety about jobs and leaving school with debt,” Brown said.
Brown’s bill, the Temporary Student Loan Debt Conversion Act, would allow students with Federal Family Education Loans, which are offered through private lenders, to convert to direct loans between Jan. 1 and Oct. 1, 2012, according to a news release.
This conversion removes the “middlemen” by eliminating the private lenders, according to the release.
“This legislation would help borrowers avoid financial penalties for missed payments, save Ohio graduates money on their student loans, and bolster the federal Pell Grant program that helped send more than 240,000 Ohio students to college from 2008-2009,” states the release.
While the consolidation is not mandatory, those who choose to convert the debt would receive up to 2 percent off the principal of their FFEL loans.
“It certainly provides simplification and eliminates confusion,” said Nancy Hoover, director of financial aid at Denison University. “… Right after graduation, they’re either trying to go to graduate school, find a job or find a place to live … sometimes it can get exhausting, and they can get into default.”
If the legislation were to pass, it would also lead to $1.8 billion in savings throughout 10 years by eliminating federal subsidies for FFEL lenders. That $1.8 billion would then be put back into the Ohio Pell Grant Program, which is facing an $11.2 billion gap in funding for 2012, according to the release.
In 2008-2009, 240,336 Ohio students received Pell Grants, totaling $671,976,231.
While Brown said he believes the bill won’t be widely opposed, he said he is unsure exactly how the timeline of the proposed legislation will play out.
“We’re just beginning to gather co-sponsors,” Brown said. “It’s hard to know what’s going to happen in a Republican House, but I think there is going to be pretty broad support for this.”
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