“We shouldn’t be balancing the budget and balancing our debt on the backs of students,” Al Franken (D-MN) said. “We need to invest in students.”
Senator Franken indicated that he is unsure whether he’ll vote for a compromise on the cost of new federal loans for college students. Franken was pushing for even lower interest rates for college students. He said his vote may hinge on whether the Senate adopts an amendment that steers any excess money generated from the new interest rate into a federal student aid program and not in the federal treasury.
Our Senator wasn’t the only one that has indicated that this is a bad deal for students.
The proposed The Bipartisan Student Loan Certainty Act would provide for undergraduate students to pay the 10-year Treasury note plus 2.05% extra. Graduate students will have to pay 3.6% over Treasury notes auctioned on June 1. Under the deal, a high school senior who takes out college loans in 2017 would see interest rates projected to be as high as 7%, higher than 6.8%current law.
Senator Jack Reed (D-RI) announced that he opposes The Bipartisan Student Loan Certainty Act. Senator Reed noted that the legislation would increase borrowing costs for future students who depend on these federally subsidized loans to help secure not just their education, but their future. The current student loan proposal as written would lock in an estimated $184 billion in student loan revenue for the federal government and allow rates to rise as high as 8.25% for undergraduates, 9.5% for graduate students, and 10.5% for parents.
Highlights of his speech :
“Instead of emphasizing the students, I think what they’ve done is just try to shield the government from investing in those students. The clear impact of the legislation that is being proposed is that it will increase the cost of education for students. We need to ensure our students have an opportunity to earn a degree without mortgaging their future.”
“Now, if we adopt an amendment as I propose, at least we are telling parents they won’t be worse off than current law and they’ll be better off because of interest rates at the moment and in the next several years. And I hope we could do that. We are looking at federal student loan debt that is over $1 trillion. This can only mathematically increase that debt. We should be investing in our students, giving them the benefit of relatively low-cost loans so they can go to school and get on with their lives and get our economy moving forward again. And this goes to one of the core issues that we face as a country. Indeed, it is a core issue across the globe — the growing inequality of income and, in a sense, opportunity in our country and in countries across the globe. Now, here in the United States, the great engine for opportunity has always been education, and if we make it more expensive, then fewer people can take advantage of it. And if fewer people can take advantage of it, the inequality will grow because they won’t have the chance for the good-paying jobs.”
Echoing Senator Reed in a separate floor speech, Senator Elizabeth Warren (D-MA) spoke out
Highlights of her speech :
But here’s the problem. From the very beginning, Republicans have dug in their heels and insisted that any new student loan proposal maintain the same $184 billion in profit that the government currently makes on student loans. They insist that whatever we do, the government must make the same profits off students that they will make now by doubling the interest rate to 6.8%. They say, whatever you do, make sure that the government makes $184 billion off our students.
But in the end, this is a simple math problem. If Republicans insist that we continue to make the same amount of profit in the student loan program, that just means that students in future years will have to pay higher rates to make up the difference. In other words, kids who are sophomores in high school right now will end up paying even more so students who are sophomores in college today can pay a little less.
I don’t believe in pitting our kids against each other. I don’t think high school sophomores should pay more so college sophomores can get a break. In fact, I think this whole system stinks. We should not go along with any plan that demands that our students continue to produce huge profits for our government. This is wrong.
Making billions and billions in profits off the backs of students is obscene.
And long term, we need to do three things:
• First, eliminate government profits from new student loan programs – period.
• Second, refinance existing student debt to reduce the profits that are crushing our young people.
• And third, reduce college costs so that American families can pay for college without burying themselves in debt.
The ultimate question is : Should the US Treasury debt be retired by excessive profits from students’ loans ?
The follow-up question is : How soon will we hear that it is time to revise the program to lower rates once interest rates rise (which has already happened) ?
A bad solution is no solution.