Skip to main content

Well this is good news indeed:

A little more than two weeks after introducing her first bill, Sen. Elizabeth Warren (D-Mass.) is already seeing a wave of strong support.

Back on May 8, Warren announced her plans to set student loan interest rates at the same level big banks receive from the Federal Reserve. Come July 1, some student loan rates are set to double from 3.4 percent to 6.8 percent, prompting Warren to push for legislation that reduces the level to 0.75 percent.

By Thursday, Warren's website showcased that more than two dozen organizations have endorsed the measure. Among the notable supporters were major universities like the Massachusetts Institute of Technology and groups like American Federation of Teachers.

Coupled with the support from outside sources is a strong core of political colleagues behind the bill. Sens. Mark Begich (D-Alaska), Barbara Boxer (D-Calif.), Mary Landrieu (D-La.), Claire McCaskill (D-Mo.), Jeff Merkley (D-Ore.) and John Rockefeller (D-W.Va.) have joined on as co-sponsors, and Rep. John Tierney (D-Mass.) has introduced a corresponding House version of the bill. - Huffington Post, 5/24/13

Glad to see Senators Mark Begich, Merkley and Warren co-sponsoring this legislation.  Warren and Congressman John Tierney (D. MA-6) make an excellent case for this legislation:

UNITED STATES - FEBRUARY 26: Sen. Elizabeth Warren, D-Mass., listens during the Senate Banking, Housing and Urban Affairs Committee hearing with Federal Reserve Chairman Ben Bernanke on Capitol Hill on Tuesday, Feb. 26, 2013. (Photo By Bill Clark/CQ Roll Call)
Some people say that we can’t afford low interest rates for students. But the federal government offers far lower rates on loans every single day —they just don’t do it for everyone. Right now, a bank can get a loan through the Federal Reserve discount window at a rate of less than one percent. The same big banks that destroyed millions of jobs and broke our economy can borrow at about 0.75 percent, while our students will be paying nine times as much as of July 1.

This is not fair. And it’s not necessary, either. The federal government makes 36 cents on every dollar it lends to students. Just last week, the Congressional Budget Office announced that the government will make $51 billion on the student loans it issued this year — more than the annual profit of any Fortune 500 company, and about five times Google’s yearly earnings. We should not be profiting from students who are drowning in debt while we are giving great deals to big banks.

That’s why we introduced the Bank on Students Loan Fairness Act. The bill gives students the same deal that we give to the big banks by allowing those who are eligible for federally subsidized Stafford loans to borrow at the same rate offered to banks through the Federal Reserve discount window. For one year, the Federal Reserve would make funds available to the Department of Education to make these loans to our students. This would give students relief from high interest rates while giving Congress time to find a long-term solution.

Fixing the interest rate on new subsidized loans is only a first step in helping students who are drowning in debt. We must ensure that the interest rates on all student loans are as low as possible, and that struggling borrowers have options to help them avoid default. Congress will have the opportunity to address these issues next year when it reauthorizes the Higher Education Act. We will work with our colleagues to make student loans a fair deal for students rather than a profit center for the federal government.

Economists explain that banks need low rates because their stability is essential to our shaky economic recovery. But students are just as important as banks to a strong recovery. High levels of student debt pose a risk to our economy if students cannot pay it back. If the Federal Reserve can lend trillions to financial institutions at low rates to grow the economy, surely it can float the money that will keep student loan payments low, keep us competitive, and grow our middle class. - Boston Globe, 5/21/13

Being on the side of students and middle-class families is not only the right thing to do, it's also smart politics.  Merkley, Begich and Landrieu made the right call and I applaud them for going forces with Senator Warren.  Warren has also co-sponsored Senator Jack Reed's (D. RI) legislation to help keep interest rates low:

Senator Warren is also a co-sponsor of the Student Loan Affordability Act, introduced by Senator Jack Reed (D-RI), which would extend existing interest rates on subsidized Stafford loans for two years.

Student loan interest rates are set to jump from 3.4 to 6.8 percent, while banks can borrow from the Federal Reserve’s discount window at a rate of approximately 0.75 percent. The Bank on Students Loan Fairness Act would allow students to borrow funds at the same low rate that banks borrow from the Federal Reserve for a year, providing a window for Congress to find a fair, long term solution on student loan interest rates.

The current list of endorsers is below. Please click here for the most up-to-date list.

Colleges and Universities in Massachusetts include Babson College, Bentley University, Brandeis University, Boston College, Dean College, Emerson College, Emmanuel College, Hampshire College, Lasell College, Marian Court College, New England Conservatory, Nichols College, Northeastern University, Simmons College, Wheaton College, Williams College, and Worcester Polytechnic Institute.

Other organizations include American Federation of Teachers, Association of Independent Colleges and Universities in Massachusetts (AICUM), representing over sixty colleges and universities in Massachusetts, Campaign for America's Future (33,327 petition signatures), Credo (83,656 petition signatures), Democracy for America (106,512 petition signatures), Move On (430,176 petition signatures), National Organization for Women, National Youth Association, Progressive Change Campaign Committee (438,369 petition signatures), Rebuild the Dream, Student Debt Crisis, United States Student Association, and Young Invincibles. - Go Local Worcester, 5/23/13

Democracy For America is helping Warren gain more support for her bill.  You can call your Senator and urge them to get behind and report your call here:

And if you would like to donate to Tierney, Merkley, Begich or Landrieu's re-election bids, you can do so here:

Rep. John Tierney (D. MA-6):

Senator Jeff Merkley (D. OR):

Senator Mark Begich (D. AK):

Senator Mary Landrieu (D. LA):

Originally posted to pdc on Fri May 24, 2013 at 12:00 PM PDT.

Also republished by Koscadia, Youth Kos 2.0, PDX Metro, Massachusetts Kosmopolitans, Louisiana Kossacks, and The Democratic Wing of the Democratic Party.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  poopdog - loans from the Fed to banks (1+ / 0-)
    Recommended by:

    have a maximum maturity of 30 days and are fully secured. Why would a long term, unsecured, student loan be priced in the same fashion?

    The Fed loans money to the US Treasury every day by purchasing and holding Treasury securities. Why would the Fed agree to loan money directly to the Dept of Education at rates lower than those the Fed charges the US Treasury?

    "let's talk about that"

    by VClib on Fri May 24, 2013 at 12:08:11 PM PDT

    •  The rates charged by the Fed are political (2+ / 0-)
      Recommended by:
      Words In Action, loggersbrat

      decisions made to support things the country finds valuable and important. Like a healthy banking system. So, the Fed takes in financial data and mixes it with political decisions and sets rates. That's why we've had this anti-inflation fetish at the expense of wage growth, for instance.

      Warren is calling student loan support the same kind of political decision. We'll base student loan rates on numbers that the country finds to be valuable and important.

      Frankly, I think Senator Warren is doing all of us a favor by making it clear that the Fed isn't a group of scientists mandating interest rates as some sort of basic truth.

      •  Congress doesn't control the Fed (0+ / 0-)

        The Fed receives no tax dollars, funds itself and actually sends its annual profits to the Treasury. Why would the Fed ever agree to do this and establish a precedent that it would loan money directly to cabinet departments and not through Treasury?

        "let's talk about that"

        by VClib on Fri May 24, 2013 at 01:34:38 PM PDT

        [ Parent ]

    •  I would agree with you (1+ / 0-)
      Recommended by:

      if this were being proposed as a long-term solution.  As ongoing policy, there are a lot of problems with basing long-term loan rates on sometimes-volatile short-term markets.

      But from the article, this is proposed as a one-year policy, "providing a window" for Congress to find a better long-term solution. As an interim policy, I'd find 0.75% acceptable, or keeping it at 3.4% -- but it is important to do something now to prevent the rise to 6.8%.  As public policy, and as a question of fairness, it makes absolutely no sense to charge student borrowers nearly twice the rate available on 30-year mortgages.

      As for the public subsidy question, I think it makes a lot of sense to subsidize education costs, focusing on those who need to borrow.  We already provide big subsidies, via tax deductions, for folks buying expensive houses -- I find that a lot harder to justify.

      •  Chas - I am all for keeping the rates at 3.4% (0+ / 0-)

        But think it is a very dangerous precedent to have the Fed loan money directly to a cabinet department through the discount window. It's a crazy idea.

        "let's talk about that"

        by VClib on Fri May 24, 2013 at 08:35:29 PM PDT

        [ Parent ]

  •  Dems need to rally around this. (2+ / 0-)
    Recommended by:
    llywrch, CuriousBoston

    It has overwhelming support from the base and it could bring in students to vote in at least appreciable numbers in 2014.

    It is also is a very good thing to do.

    Win. Win. Win.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site