Sens. Mazie Hirono and Brian Schatz have signed onto a bill that would allow those with outstanding student loan debt to refinance at the lower interest rates currently offered to new borrowers.

The Bank on Students Emergency Loan Refinancing Act was introduced by Sen. Elizabeth Warren of Massachusetts. 

Many former students with outstanding federal loans have interests rates of 6.8 percent or higher, according to a press release from Hirono. New undergraduate borrowers who take out new loans before July 1 will pay a rate of 3.86 percent, thanks to the Bipartisan Student Loan Certainty Act that was passed by Congress last summer.

Hawaii students with loans owe more than $23,000 on average, Hirono’s press release says. 

“This debt can make it extremely difficult for individuals and families to build a future beyond school, including owning a home, starting a business and pursuing their dreams,” Hirono said in a statement. “The Bank on Students Emergency Loan Refinancing Act will make it easier for these borrowers to refinance their student loans and keep more money in their pockets.”

More than 20,000 undergraduates in Hawaii used federal loans to pay for school last year alone, according to Hirono. Moreover, as of 2012, nearly 12 percent of Hawaii consumers had outstanding student debt, with an average balance of $23,490 per borrower; 11.1 percent of those balances were delinquent for 90 days or more.

Read more about the federal refinancing bill here. 

Photo: Student debt. (Courtesy of DonkeyHotey via Flickr.)

— Alia Wong