I Stafford loan interest rate change The number of 5% was chosen by using the current 10 year Treasury Bond

interest rate of about 1.8% and adding 3.2% to that. The reasons we are proposing this change include Refinancing Refinancing is a practical solution to address the student loan debt, the highest form of debt in our nation that amounts to over $1 trillion. While addressing this the likelihood of loan repayment will increase with lower interest rates and the savings found from these interest rates will place more money within our economy. Refinancing just those federal student loans with interest rates above 5% would save $14 billion for individuals in the following year and send $21 billion into our economy at large. By opening refinancing to these individuals 71% of federal student loan holders would be eligible to take advantage of this program.

III Funding At the conclusion of the 2013 fiscal year the student loan program will have made an estimated $35.5 billion in revenue. After administrative costs of an estimated $1.7 billion the assumed net revenue will be $33.8 billion. With student loan rates lowered there will still be enough income to fund administrative costs. The only difference is that we are not making a business out of educating the future leaders of our nation. The heightened administrative costs due to refinancing will be combated by a fee. This fee will be unique to the individual and their loan. A formula may be determined by the finance committee taking into account, length of loan, current interest rate, and future savings from refinancing. (Similar to refinancing a mortgage.).