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It is move-in weekend at many colleges and universities. For incoming freshmen, these days bring excitement, probably a bit of nervousness, some tear-filled goodbyes with parents and this reality - for many freshmen, the coming weeks and months might be the last time for a while that you are not in debt. Once the bills start arriving, many students will begin racking up tens of thousands of dollars in debt. Already, there are more than 40 million Americans with outstanding student loan debt. And this has become an issue in the presidential campaign, especially on the Democratic side. NPR's Tamara Keith looks at a popular proposal that some say just isn't as promising as it seems.
TAMARA KEITH, BYLINE: Here's the problem, as described by Jen Mishory, with Young Invincibles, an advocacy group.
JEN MISHORY: The average person who leaves campus today with student debt is leaving with about $30,000 in debt. That's an enormous number that's changed dramatically in the last few decades.
KEITH: And for people paying high interest rates, Mishory says the debt load is all the more daunting.
MISHORY: It can be very difficult to actually start to pay down the principle that you owe and really start to climb out of that hole of debt that you're facing.
KEITH: She says some young people are even putting off getting married and buying homes. Enter the 2016 presidential field. Here are Vermont Sen. Bernie Sanders and former Secretary of State Hillary Clinton making the case for refinancing.
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BERNIE SANDERS: It is insane that people in this room are paying 8, 9, 10 percent interest rates on student debt when you can refinance your home for 2 or 3 percent.
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SANDERS: It just makes sense. If you can refinance your mortgage or your car loan, you should be able to refinance your student loan, too.
KEITH: Both proposed reducing interest rates and allowing borrowers to refinance their private student loans as well as any federal loans. They'd pay for it by raising taxes. Republican candidates, including former Arkansas Gov. Mike Huckabee and New Jersey Gov. Chris Christie, have expressed an openness to refinancing student debt.
MATTHEW CHINGOS: The politics of it are really good. It has a nice tagline, makes for a nice stump speech.
KEITH: Matthew Chingos is a senior fellow at the Urban Institute, and he questions whether this popular idea is really the best policy.
CHINGOS: It's a regressive policy because it gives the biggest benefits to those with the biggest debts. And those with the biggest debts tend to include people like doctors and lawyers who have expensive graduate degrees who would probably like a check from the government but can repay their loans just fine on their own.
KEITH: By his calculation of Federal Reserve data, the wealthy have by far the most student debt, and, thus, would have the most to gain.
CHINGOS: For people who are truly struggling, who have very low incomes, changing their interest rate is going to change their payment by a couple of dollars. And if they can't make their current payment, they're not going to be able to make a payment that's a couple dollars lower. So what they need to be doing is getting into an income-based repayment program.
KEITH: Income-based repayment programs allow borrowers to make payments based on what they can afford. At the end of 20 or 25 years, the outstanding balance is forgiven no matter how much interest is racked up. Jason Delisle is director of the Federal Education Budget Project at the New America Foundation.
JASON DELISLE: So the sort of continuing infatuation with talking about interest rates on student loans - if you pay based on your income and income-based payment, you're not even paying on the interest rate anymore.
KEITH: Clinton and Sanders both want to expand these programs and have numerous other proposals to make college more affordable. Beth Akers at the Brookings Institution wishes there was more focus on that than on refinancing.
BETH AKERS: We'd really like to help out everyone who has student loan debt. But it's a matter of this being an expensive thing to do. It's not free for the government to reduce interest rates for these borrowers. So we want to think, is this really the most efficient or appropriate way to be spending taxpayer dollars?
KEITH: She'd prefer to see the money spent helping borrowers who need it the most. But the thing that really gets the crowds going at Sanders and Clinton campaign events is that line about refinancing cars and houses and student loans. Tamara Keith, NPR News.
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