U.S. Sen. Chuck Grassley (R-IA) and U.S. Rep. Todd Young (R-IN) led a bipartisan, bicameral group on Friday in calling for the removal of barriers preventing nonprofit lenders from offering refinancing options for student loan debt.
In letters to the Treasury Secretary Jack Lew and IRS Commissioner John Koskinen, the lawmakers argued that nonprofit lenders having access to tax-exempt bonds to refinance student loans would increase the pool of lenders offering refinancing options.
“Expanding the ability of non-profit lenders to refinance student loans will result in more options and a better deal for more Americans working to pay down their student debt,” the lawmakers wrote.
The lawmakers asked for clarification of the three main barriers “to fully allow state-approved programs to take advantage of this guidance and offer refinancing programs to help education loan borrowers across the country.”
The lawmakers also asked whether an original loan that is refinanced with tax-exempt bonds not being considered “refunding bonds” to alleviate confusion and ensure that borrowers could use these tax-exempt bonds to offer refinancing.
Additionally, the lawmakers called for guidance about facts and circumstances that issuers could rely on to determine when an original loan meets loan size limitation requirements for tax-exempt financing.
Finally, the lawmakers asked for clarification about whether a parent could refinance a student’s loan, and vice versa, using tax-exempt bonds.
In addition to Grassley and Young, the letter was led by U.S. Sen. Jack Reed (D-RI) and U.S. Rep. John Larson (D-CT). The letter was signed by almost 40 Senators and Representatives including U.S. Sens. Joni Ernst (R-IA) and Kelly Ayotte (R-NH), and U.S. Reps. David Young (R-IA), Erik Paulsen (R-MN), Peter Roskam (R-IL) and Tom Reed (R-NY).