With student loan interest rates about to double from the current 3.4% to 6.8% on July 1st, Senator Warren announced a new proposal today (her first bill in Congress!) that would make sure students get the same break that big banks do. In her bill, students would be able to borrow at the same rate that the federal reserve charges banks.
According to the Los Angeles Times:
[Warren] said, "our students are just as important to the economic recovery as our banks...We should make the same kind of investment in our young people who are trying to get an education."
The same frustration was expressed by The Education Trust's Kati Haycock in a
Huffington Post article last year regarding the debate around student loan interest rates:
But only in the crazy world of federal budgetary politics can protecting a 3.4 percent interest rate feel like a victory. After all, the Federal Reserve lends money to commercial banks at a discount rate that currently stands at 0.75 percent. That's right: 0.75 percent. In what universe does it make sense to set interest rates for loans to help low- and moderate-income Americans attend college at more than quadruple the rate we expect the banking industry to pay?
It's a good question...one that Senator Warren has clearly thought about.
We'll have more on this soon, but for now, we'll leave you with the Elizabeth Warren meme above, which -- for the moment -- just about say it all.
Cross-posted at I Am Not A Loan.