Should students get the same sweetheart lending rates as banks?
Banks get super cheap loans. Sen. Elizabeth Warren thinks students should, too
Sen. Elizabeth Warren (D-Mass.) has a plan to ease the student-debt crisis: She introduced a bill on Wednesday that would let college students take out loans at the same rate banks get when they borrow from the Federal Reserve. The rate on Stafford subsidized loans is set to double in July to 6.8 percent; financial institutions low on cash can get short-term loans at a sharply lower rate — currently 0.75 percent. Warren wants to give students the special bank rate for a year so Congress can work out a long-term fix.
Warren, a longtime consumer advocate elected to her first term last year, said the bill — her first — is just a simple attempt to be fair. "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," she said. "That isn't right."
Liberal commentators agreed. It's "a damned good thing" students have Elizabeth Warren looking out for them in Washington, says Joan McCarter at Daily Kos. They're already overburdened with debt, and their plight will only grow more dire if Congress lets their loan rate double, McCarter says. Warren's plan to give them the same sweetheart deal banks get would be a welcome break. Imagine that, says Robyn Pennacchia at Death and Taxes, granting students the same "comfy 0.75 percent interest rate" that rich corporations get. "Elizabeth Warren is the best, she's just the freaking best."
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Not everyone shared the same glee. Banking lobbyists, for example, were not pleased. Patrick Sims, a director in policy research at Hamilton Place Strategies, said it was unfair to compare emergency lending rates that have helped banks through moments of financial crisis to student loans that can be repaid over many years. "Using something completely unrelated and feeding into populist animosity toward large banks to increase the sympathy for the student loan body or students in general, it just kind of sounds like a weird way to legislate," Sims tells Politico. "I don't know if it necessarily helps our student loan situation in the United States today."
It's unclear how many lawmakers will support Warren's proposal. Some Democrats simply want to extend the 3.4 percent rate for another year, as Congress did last year when President Obama made the looming Stafford rate hike a campaign issue. Some Republicans favor a proposal to let the rate rise and fall with the government lending rate.
If nothing else, Warren is intensifying a necessary debate. "I know when I graduated grad school and law school, a good many decades ago now," says John Aravosis at America Blog, "I was already $60,000 in debt." He also notes that he had friends who "were $120,000 in debt" and that his "monthly loan payment was equivalent to my rent." For Aravosis that meant putting off major financial milestones, like buying a home, until age 40 or beyond. "There was a lot of opportunity cost to taking out those loans — and a lot of benefit too," he adds. "But it's still absurd the amount of debt we're forced to take on in this country, simply to get an education."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
-
Vladimir Putin's secret sons
Under The Radar A new report claims the Russian president has two young children who he keeps out of the public eye
By Elizabeth Carr-Ellis, The Week UK Published
-
8 touring theater productions to mark on your calendar this fall
The Week Recommends A pop icon, Shakespeare reconsidered and a sublime musical about mortality are all on the boards
By Scott Hocker, The Week US Published
-
Today's political cartoons - September 8, 2024
Cartoons Sunday's cartoons - circuitous thoughts, overheating circuits, and more
By The Week US Published
-
A brief history of third parties in the US
In Depth Though none of America's third parties have won a presidential election, they have nonetheless had a large impact on the country's politics
By Joel Mathis, The Week US Published
-
How could J.D. Vance impact the special relationship?
Today's Big Question Trump's hawkish pick for VP said UK is the first 'truly Islamist country' with a nuclear weapon
By Harriet Marsden, The Week UK Published
-
Biden, Trump urge calm after assassination attempt
Speed Reads A 20-year-old gunman grazed Trump's ear and fatally shot a rally attendee on Saturday
By Peter Weber, The Week US Published
-
Supreme Court rejects challenge to CFPB
Speed Read The court rejected a conservative-backed challenge to the way the Consumer Financial Protection Bureau is funded
By Peter Weber, The Week US Published
-
Arizona court reinstates 1864 abortion ban
Speed Read The law makes all abortions illegal in the state except to save the mother's life
By Rafi Schwartz, The Week US Published
-
Trump, billions richer, is selling Bibles
Speed Read The former president is hawking a $60 "God Bless the USA Bible"
By Peter Weber, The Week US Published
-
The debate about Biden's age and mental fitness
In Depth Some critics argue Biden is too old to run again. Does the argument have merit?
By Grayson Quay Published
-
How would a second Trump presidency affect Britain?
Today's Big Question Re-election of Republican frontrunner could threaten UK security, warns former head of secret service
By Harriet Marsden, The Week UK Published