June 20, 2017
Kim Dancy was mentioned in Forbes about her recent report, In the Interest of Few: The Regressive Benefits of Federal Student Loan Refinancing.
If Bill Gates distributed his $89 billion fortune equally among the world’s 7.5 billion people, everyone would receive only $12. The whole exercise would be largely pointless. The same principle applies to proposals to allow student borrowers to refinance their loans at current interest rates, according to a recent New America report by Kim Dancy and Alexander Holt.
Dancy and Holt analyze a proposal by Senator Elizabeth Warren (D-MA) to allow people with federal or private student loan debt to refinance those loans at current interest rates, which are presently near historic lows. Refinancing essentially means using a new loan to immediately repay an old one. The borrower then pays only the new loan, which may have better terms than the old: in this case, a lower interest rate.