Senator Elizabeth Warren said long before she ever pictured herself in her current role, she worked with members of Congress to address the student loan issues in the country. Now, as a representative of Massachusetts, Warren is trying to push legislation forward to fix the financial problem college students face.
On Monday, during a roundtable discussion in Boston, Warren and Congressman John Tierney continued talks about the “Bank on Students Loan Fairness Act,” a proposal that would drastically slash the student loan interest rate for one year while elected officials look for a long-term approach to helping coeds get an affordable education, making sure they can afford their loan payments in the future.
According to Warren, on July 1, student interest rates are set to double, rising from 3.4 to 6.8 percent. Meanwhile, she says, large financial institutions like banks can borrow from the Federal Reserve’s “discount window” at a rate of 0.75 percent. She said there is an “imminent” deadline to act on this proposal in the best interest of the economy. “Keep in mind, every time the Federal Reserve opens its window to let the largest banks borrow at [point seven-five percent] it’s not even scored on the budget—they are getting a subsidy. They get away with it, and it’s a subsidy that remains entirely hidden in the federal budget. But [for some reason] there is a resistance to give our kids some kind of break. Surely we care about our kids as much as our banks,” Warren said.
Warren said the proposed legislation doesn’t change the eligibility requirements for student loans, and doesn’t increase the amount available for them. “What it does do is keep the costs down for our kids,” she said.
Both Warren and Tierney argued Monday that the burden of high student loan debt is a threat to economic recovery, because students can’t afford to move out of their parents’ houses, buy cars, or search for a home of their own, based on the financial weight they carry on their shoulders once they graduate. “Families are crushed by student loan debt which means they can’t support an economic recovery,” said Warren. “In the short term, with rates about to double, what we need to do to invest in our kids so they can get an education, and so they can be everything they possibly can be.”
Students present at the hearing, which included members of the state’s Board of Higher Education and officials from American Student Assistance, asked if there was a plan in place to also lower overall college fees and costs. Warren said as of now, there was not, but it would be examined once the one-year fix was in place.
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