Boston Schools Back Warren’s Proposal To Stall Student Loan Interest Rate Increases

Emerson, Boston College and Northeastern University are just a few examples of schools that are on board.

By | Boston Daily |
Photo courtesy of warren.senate.gov

Photo courtesy of warren.senate.gov

As the deadline nears for the potential inflation of student loan interest rates, Congress can’t seem to agree on the best approach to help incoming students manage their money while pursuing a college education. But dozens of Boston area schools have stepped up in support of a proposal put on the table by Sen. Elizabeth Warren which would essentially stop interest rates for students to borrow from doubling, and set the rates equal to those given to large financial institutions like banks.

Starting July 1, student loan interest rates are set to jump from 3.4 to 6.8 percent, something Warren has called a “threat” to economic recovery efforts. Warren’s proposal, called the “Bank on Students Loan Fairness Act,” would allow students to borrow funds at the same low rates as banks do from the Federal Reserve, roughly 0.75 percent, for one year, giving Congress enough time to figure out “a fair, long-term solution on student loan interest rates.” The act is co-sponsored by Congressman John Tierney.

The Republican-controlled House of Representatives recently passed a bill that would stall those rates for now, however, it would allow them to increase at a later date. President Barack Obama has said he would veto the bill once it lands on his desk. “If Congress lets student loan interest rates double this summer, our kids will pay rates nine times higher than the big banks on their government loans. That’s wrong,” Warren said in a statement.  “We should be encouraging our students by investing in their education. Keeping interest rates low not only will help young people who are drowning in debt, but also will strengthen our economy and help grow the middle class.”

Warren was in Boston last week to promote the “Fairness Act,” and since her time in the city has garnered the support of more than a dozen local colleges and universities, including Northeastern University, Emerson College, Babson College, Bentley University, Brandeis University, and Boston College. “As college presidents, we have a responsibility to do all that we can to maintain affordability, and ensure that students graduate as quickly as possible,” wrote Leonard Schlesinger, president of Babson College, in a letter addressed to Warren.

Schlesinger said last year the school provided $23.8 million in need-based institutional aid to undergraduate students. “Unfortunately, students graduating today are still faced with a difficult job market. During these economic times, it is critical that interest payments remain as low as possible so that students can repay their loans…if [they] were to double in July, it would have negative consequences on thousands of students, putting them at a greater risk of falling behind on defaulting their payments.”

Since she came to the city, a host of local organizations have also vowed to stand behind the proposal, including the Association of Independent Colleges and Universities in Massachusetts. “Senator Warren’s and Congressman Tierney’s legislation is a creative, intermediate solution to the pending doubling of the student loan interest rates. The student loan program should not be a profit center for the Federal government.  In this tight economy, it is both fair and smart to keep student loan interest rates low and affordable for recent graduates,” said Richard Doherty, president of the AICU.

According to officials, because the Senate is currently in recess this week, at the earliest they could take up the act next week with a package of other higher education-related proposals. But the deadline to take action is fast approaching.

  • Rich Cullen

    How about the colleges cut their cost and lower tuition?

    • agingcynic

      Then Liz and hubby wouldn’t be making over half a million a year. Talk about the wrong person to bring the message.Did Tierney warn about the evils of gambling at the same meeting?

      • Burzghash

        Ahhh, there’s that well-sourced and highly informed ad-hominem we’re so used to. Good thing you opted for that instead of a factual, evidence based arguments. Was getting worried the other side might actually start rubbing a few brain cells together.

        • Wendy Lint

          oh perfect

  • minemothafuckinstrone

    “Emerson, Boston College and Northeastern University are just a few examples of school’s that are on board.”

    Apostrophe? Seeeeeeerioulsly?????

    • Leo

      Also, Babson College is listed twice.

    • Wendy Lint

      lul

  • Bandit

    “Warren Supports More Tax subsidies to Private Non-Profits”

    FTFY

  • S W

    Typical socialist picking sides in business :(
    Why not freeze the tuition charged since this has been expanding at 100′s of times our inflation rate?
    Why is Warren comfortable with the schools’ fee schedule I wonder?
    hmmmm…

    • Wendy Lint

      ur kidding right?

  • Carson True

    When doing my exit interview for my federal stafford loans in May 2013 my interest rate was already listed as 6.8%. In this article it says that the rates wouldn’t double to 6.8% until July 2013. Any thoughts? I attended the University of Hartford.

    • Sal

      If you were pursuing a graduate degree then the rates are 6.8 fixed for the Unsubsidized Loan (Stafford) and 7.9% fixed for the Graduate PLUS Loan. The origination fee (the portion of the loan kept by the Feds for processing expenses) is 1% (Sequester will increase it to 1.053% for the coming year) and 4% (Sequester will increase it to 4.212% for the coming year) respectively.

  • April Wiser

    I think that the approach is good but it is also a good step by these institutions to cut down the students fess as they are charging a healthy amount of tuition fees .. Also they can help the needy students to recover their educational expenses… So this is the better solution in my opinion.

  • http://www.facebook.com/people/Ratt-Johnston/100000680481349 Ratt Johnston

    Is this the same Warren who claimed she was Cherokee ?

  • justmytwocents2

    There is so many things wrong with this. First, if the govt allows this, why aren’t they shamed into doing it for any purchase – cars, homes, etc. Why are we cherry picking what industries we’ll help in this country? Oh yeah, we’re becoming nothing more than socialists. Let’s say we agree to do this, how is the govt going to fund other things? The reality is that they’re stealing from Peter to pay Paul – Pell Grants and other federal aid is being subsidized by borrowers already, especially by graduate students. Why is the undergrad allowed to pay next to no interest, yet the grad student is paying 6.8% on unsub (already no sub eligibility) and 7.9% on PLUS loans? Yes, you guessed it…because we’re now cherry picking industries AND populations to assist and the rest will subsidize it all. Sound familiar? It should — it reflects the good old tax system in this country. Lastly, you realize that the loans are subsidized and therefore the govt is the body that is responsible to pay the interest while the students in school so in reality – this sounds so fabulous for the student but really the taxpayer is just paying a smaller portion towards this big old bill.
    Do all you supporters still think this is such a fantastic deal? Please…typical Washington DC beaucracy with a big spin to make it sound like the govt can take care of us all and nobody has to pay for it. This taxpayer doesn’t support this ridiculous bill at all.

  • Steven Lourie

    Of course universities support this. The easier it is for students to get a loan, the more they can raise their tuition.

  • kobe

    More students, fewer financial alternatives and the rising costs of college tuition and fees have all incited a huge increase in private and federal loans for students. Well these would be good federal aid for student’s or else some other financial institutions as QuickQuid, 1st Stop, paydaybank.co.uk for their vital assistance in moving ahead for the welfare of student’s.