California college graduates with privately-held student loans could get help refinancing those loans from the state under a proposal that passed a Senate committee Wednesday.
Unlike other kinds of debt, like home loans and credit cards, college loans aren’t easy to refinance. Former Assembly Speaker John Pérez hopes his bill will solve that problem. It would allow grads who are considered “qualified borrowers” to refinance private student loan debt at lower interest rates.
Pérez says the program would create a “loan loss reserve fund” – paid for through the state budget – to reduce the risk for lenders to participate. “We think that with as little as $6 to 10 million, you could create enough leverageable investment to significantly reduce the interest rates charged to students,” he says.
There’s no formal opposition to the bill. It passed the Assembly earlier this year and will likely come up on the Senate floor in August.