Senator Elizabeth Warren (D-MA) has introduced her first piece of legislation. It’s called the Bank on Students Loan Fairness Act, and would reduce the rate students pay on federally-subsidized student loans for one year, from 3.4% to 0.75%.
Without congressional action, on July 1 the rate is set to double from 3.4% to 6.8%.
Warren brings up an interesting point – her bill simply asks students to pay the same rates that big banks pay for borrowing. Currently, big banks pay one-ninth the rate that students pay.
Meanwhile, big banks pay interest that is one-ninth the rate that students will pay. That is wrong. It doesn’t reflect our values. We shouldn’t be profiting from our students who are drowning in debt while we’re giving great deals to big banks. We should be investing in our young people so they can get good jobs and grow this economy, so let’s give them the same great deal the banks get….
If the Federal Reserve can float trillions of dollars to large financial institutions at low interest rates to grow the economy, surely they can float the Department of Education the money to fund our students, keep us competitive, and grow our middle class.
Warren notes that American graduates are collectively $1 trillion in debt.
I know when I graduated grad school and law school, a good many decades ago now, I was already $60,000 in debt. Some of my friends were $120,000 in debt. Just to get a feel for what that meant, in 1989 terms – my monthly loan payment was equivalent to my rent. And that’s my rent in DC, which is far above the national average. I put off buying a home (in my case, a condo – homes in DC are luxuries) until I was in my 40s.
There was a lot of opportunity cost to taking out those loans – and a lot of benefit too. But it’s still absurd the amount of debt we’re forced to take on in this country, simply to get an education.
Unlike the big banks, students don’t have armies of lobbyists and lawyers. They have only their voices. And they call on us to do what is right.
Here’s Elizabeth Warren’s statement, and the text of her statement is below.