A tax on millionaires would pay for student loan debt relief under a plan proposed by U.S. Sen. Dick Durbin (D-Ill.) The bill would allow federal and private loan borrowers to refinance at current interest rates. Durbin says it would be fully paid for by enacting the so-called “Buffett Rule,” which would charge a 30 percent minimum tax on those making more than $2 million per year.
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“That applies to 2 percent of wage earners in America,” Durbin said. “The revenue that comes in from that minimum tax on millionaires is enough to finance what we’re talking about here—to pay for the refinancing of these loans.” The rule is named for investor Warren Buffett, the fourth-richest man in the world as of this year, who said he believed it’s wrong that he was taxed at a lower rate than his secretary. It was first proposed by President Obama in 2012, but didn’t gain enough support to pass in Congress.
The current rate for the most popular federal student loans, known as Stafford loans, is 3.86 percent, but Durbin says existing borrowers may be locked in at rates as high as 7 percent. Durbin expects the bill to put up for a vote this year, though he added there are no Republican co-sponsors of the legislation.