These kinds of conversations and second-guessing are common among millennials, who are coping with historic increases in college costs. Tuition at public four-year universities has risen by more than 700 percent since 1980. On average, a full-time student paid about $18,000 in tuition and fees for the 2013-14 school year, according to the College Board. In 1980-81, the average yearly total for tuition, room, and board was less than $2,500, according to the Education Department.
The costs add up. Recent graduates talk of delaying families, not buying homes, and not starting new businesses because they lack the capital — decisions that almost certainly will negatively impact the U.S. economy. We just don't know yet how severe the effect will be.
And yet, the policy solutions for helping these graduates only nibble around the edges of the problem. This week, President Obama expanded a 2011 program that allows students to cap their student-loan repayments at 10 percent of their earnings, which can lower monthly payments for borrowers on limited incomes. The expansion made an additional 5 million borrowers eligible. To date, however, the program has been underused because the earnings reports are complicated and its eligibility requirements are confusing. In addition, it applies only to federal student loans, so it won't help the 20 percent of borrowers, like Ward and Garner, who borrowed from private lenders.
In addition, many current borrowers, particularly those with private loans, have significantly higher rates that they aren't able to refinance under a quirk of the law — a problem that Warren's measure is intended to address. Some federal student loans were taken out at 6.8 percent. Garner says he pays more than 7 percent in interest for some of his private loans. (He has several.) Ward pays 7.25 percent.
Republicans objected to Warren's bill because it included the highly partisan Buffett Rule imposing a 30 percent tax rate on millionaires, a measure GOP lawmakers oppose on principle. Democratic leaders said they were open to other suggestions to pay for the refinancing costs under Warren's bill, but there was no evidence of serious discussion about a less controversial pay-for in the weeks leading up to the Senate vote.
The political hype over Warren's bill — she has proven a charismatic and aggressive critic of big banks — is outsized compared with what the legislation's actual impact would be. A borrower with a $30,000 principal balance would save $38 a month after refinancing, or about $4,000 in interest over nine years, according to the Congressional Research Service. That's not nothing, but it's not life-changing, either.
For Garner, the ability to refinance would mean that he could remove his 92-year-old grandmother as a cosigner on one of his loans. Ward says he would feel more comfortable talking with his girlfriend about marriage and a family if he could take a little bit off his monthly payment. She has debt, too, and those balances are a consideration in their future. But he added that his current financial situation wouldn't stop him from getting married. A lower interest rate would just make his life less stressful.