Congress Should Pass Elizabeth Warren’s Bill Lowering Student Loan Rates
By Robert Borosage | May 8, 2013
College students today graduate with the terrible burden of an average of $25,000 in student-loan debt. That total increases with the rising costs of tuition, even at public colleges and universities, and by the actions of our own government in letting the rates for student loans rise. If nothing is done by July 1, the rates will rise again.
Such heavy responsibilities will hold graduates back for years to come. Instead of kicking students when they are down, we should end the student debt crisis. That is why we are enthusiastically endorsing the first bill introduced by Sen. Elizabeth Warren (D-MA), which would lower student loan interest rates for one year to 0.75 percent, the same rate at which the government loans money to the banks through the Federal Reserve discount window. Student loan interest rates will double to 6.8 percent on July 1 without action.
By linking the interest rates students pay to the interest rates big banks pay, the Bank on Students Loan Fairness Act would insure that every qualified student can afford the education that he or she has earned. Senator Warren was right on the money when she said, “In effect, the American taxpayer is investing in those banks. We should make the same kind of investment in our young people who are trying to get an education.”
We hope her colleagues in the Senate and the members of the House see how Senator Warren’s bill will brighten the future of millions of students while at the same time energize the U.S. economy.
from Huffington Post
WASHINGTON — Sen. Elizabeth Warren (D-Mass.) unveiled her first bill Wednesday, designed to set student loan interest rates at the same level the Federal Reserve offers to big banks.
With some student loan rates set to double on July 1 — from 3.4 percent to 6.8 percent — Warren’s bill would reduce student loan interest rates to 0.75 percent, opening the Fed’s discount window to students.
“Every single day, this country invests in big banks by lending them money at near-zero rates,” Warren told The Huffington Post. “We should make the same kind of investment lending money to students, who are trying to get an education.”
The freshman senator said she plans to mobilize students — those most affected by student loans — to help get the bill through the Senate. “This is about their lives and if they are active in this fight, we can make this change,” Warren said.
The Fed justifies loaning money essentially for free to major banks so they can maintain liquidity during emergencies. But Warren noted that student loan debt also affects the economy. Research by the Federal Reserve Bank of New York, reported by Washington Post’s Wonkblog, found that the amount of student loan debt of Americans under the age of 25 has doubled in less than a decade, from $10,649 in 2003 to $20,326 in 2012. Along with this increase in student debt comes a decrease in the likelihood someone will take out an auto loan or a home mortgage. That burden is a drag on the economy.
Warren pointed to the GI Bill and National Defense Education Act loans, which funded her education. “It wasn’t just soldiers that got the education, it was the whole economy that benefitted from that investment,” Warren said. “Why not give students a break? Why not let them in on the same great deal that the big banks get?”
According to the Project on Student Debt, college students who graduated in 2011 owed more than $26,000 in student loans, which Warren said is, “crushing our young.”