Feature

Sen. Warren’s bad math on student loans

We won’t solve the student-loan crisis with Elizabeth Warren’s “shameless populist demagoguery.”

Ian TuttleNationalReview.com

Elizabeth Warren is at it again, said Ian Tuttle. The Massachusetts senator recently introduced legislation called the Bank on Students Loan Fairness Act that would extend to students the same 0.75 percent interest rates that she claims big banks enjoy. Too bad “said interest rates for said greedy banks do not exist.” Warren is referring to the Federal Reserve’s Discount Window, an emergency loan facility that allows big banks to borrow money against collateral for short periods at very low interest rates—hardly comparable to loans to financially strapped students, 23 percent of whom are expected to default. Warren also claims that the government makes 36 cents on every dollar it loans to students, but that’s more bad math: When you factor in “the cost of the risk the government assumes,” student loans cost taxpayers $3.5 billion in 2010 alone. It is true that unless Congress acts, almost 7 million students will see their interest rates double to 6.8 percent in July. But I’m not sure that’s so bad; considering the high default rate, 6.8 percent isn’t out of line. In any case, we won’t solve the student-loan crisis with Warren’s “shameless populist demagoguery.”

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