Hasta La Gadget!

The U.S. government should help to develop a market for student loan borrowers to refinance high-cost debt in order to allow younger households to benefit from the Federal Reserve’s efforts to provide cheaper borrowing, a senior regulator has suggested.

Rohit Chopra, the official responsible for student loans at the Consumer Financial Protection Bureau, is due to tell lawmakers on Tuesday that if harmful market practices such as poor loan servicing or structural impediments such as a concentrated credit sector are not addressed, “there may be a negative impact not just on consumers, but also on the broader economy,” according to prepared remarks he plans to make at a Senate Banking Committee hearing.

Chopra’s suggestion and warning follows a year’s worth of mounting evidence from officials at the Treasury Department and Federal Reserve Bank of New York that record student debt levels threaten economic growth, depressing consumption, investment, savings and entrepreneurship. Other side effects, such as the lack of doctors in rural areas, also may result from increasing student debt burdens, Chopra said.

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