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NEW YORK (MainStreet) — Sen. Kirsten Gillibrand (D-New York) is renewing a call for legislation that would allow students to refinance their federal student loans at lower interest rates.

Gillibrand noted that there is currently about $1.2 trillion in student loan debt nationwide — and the average New Yorker owes more than $27,000 at graduation.

"We must strengthen our middle class families instead of forcing New Yorkers deeper into debt," she said. "Keeping a high-quality education in New York affordable is the right thing to do."

Last May, Gillibrand introduced the Federal Student Loan Refinancing Act--legislation she said that could affect nearly nine in ten federal student loans. It would allow borrowers who have high interest rate loans to refinance at a fixed rate of 4%. Most rates for federal student debt are higher than 6%, she said. It was not clear whether loans that were delinquent or in default would be included, or if there would be an impact on loans in income-based repayment plans.

Student loan refinancing often gets lost in the debate over spiking rates for new loans. While the rate for new undergraduate and graduate Stafford Loans is now a relatively low 3.85%, those rates are pegged to the 10-year Treasury Bill, and rates on those loans are expected to rise throughout the decade. Nonetheless, many borrowers continue to struggle with loans that were taken out decades ago, sometimes when rates were near double digits—making a 4% rate extremely attractive.

Most students typically have multiple loans and refinancing them involves consolidating the loans. Private loans and federal loans typically can't be consolidated. Private loans are not included in Gillibrand's proposal.

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Still, any relief for people with federal loans would be significant. Gillibrand told WCBS radio in New York City on Sunday, "It would help out any graduate who has student debt. In New York alone, there are 2.7 million borrowers who have federal loan debt, and 76% of their loans would be eligible for refinancing under our bill." She also said, "It will help literally millions of people across the country who have enormous amounts of student debt."

Alluding to recent studies by the Federal Reserve Bank of New York about the negative impact of student loans, she added, "It also gives our young people the chance to buy a home, start a family, start a business. And too many young people, unfortunately, are putting those things further and further into the future because of student debt."

Kevin Stump, the higher education program coordinator at the New York Public Interest Research Group has urged President Barack Obama to join Gillibrand in supporting this legislation.

Gillibrand has called for Obama to acknowledge the importance of a student loan refinancing solution in his State of the Union speech on Tuesday night. The White House has not commented on what could be an opportunity become aligned with this issue.

A Washington Post-ABC News poll released Sunday stated that "for the first time on the eve of a State of the Union address," Americans have an overall negative view of Obama's presidency, with 46% approving of the president's performance. In both his presidential campaigns — particularly in 2008 — Obama campaigned for and received strong support from the nation's college and university students.

--Written by John Sandman for MainStreet