“Some people say that we can’t afford to help our kids through school by keeping student loan interest rates low,” said Senator Warren. “But right now, as I speak, the federal government offers far lower interest rates on loans, every single day–they just don’t do it for everyone."
Senator Elizabeth Warren (D-Mass.) introduced her first standalone bill to the Senate today: the Let's Bank on Student's Bill. The bill is to lower student loan interest rates to .75% from its current 3.4%. Not only would that be a dramatic cut, it would prevent a doubling of student loan interest rates to 6.8%, set to happen on July 1st. While the proposed law is only about student loan rates, Senator Warren's title is not an accident. We currently bank on banks (especially the big ones) with an interest rate on borrowing of .75%.
“Some people say that we can’t afford to help our kids through school by keeping student loan interest rates low,” said Senator Warren. “But right now, as I speak, the federal government offers far lower interest rates on loans, every single day–they just don’t do it for everyone. Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks–the same banks that destroyed millions of jobs and nearly broke this economy. That isn’t right. And that is why I’m introducing legislation today to give students the same deal that we give to the big banks.”
Warren noted that student loan debt is now over $1 trillion in the U.S., more than the entire country's credit card debt.
"Now, keep in mind," said Senator Warren in her remarks introducing the bill, "these young people didn't go to the mall and run up charges on a credit card. They worked hard, they stayed in class, and they borrowed what they needed to pay for an education.... These students will help us build a strong and competitive economy, they will strengthen our middle class."
It's easy to overstate the diligence and good will of students as a whole, but Warren's case holds up without that point. Countries, eventually, live and die on the strength of their education. Now more than ever, with manufacturing happening everywhere, programmers and anyone else who works at a computer able to work for any company in the world that desires their services worldwide, and economic booms dependent on new innovations from fracking to Google's search algorithm, economic prosperity is built on a large core population, free to be dynamic and creative. There are occasional drop out success stories, but for most of us, that requires an education, and that education costs money. A lot of money. Ideally, government would do more to fund education post-high school and pre-grade school, but for now, we have a system that encourages students to borrow tens of thousands of dollars and pay that back over the next decade or so after they leave school.
Elizabeth Warren has a gift for framing issues in a genuine populist way. Every politician wants to be seen as a populist, but Warren actually is one, and she's good at articulating it. That's why the calls for her to run for president aren't going to die down anytime soon.