Well, that program didn’t work out too well. As reported by the Huffington Post, “The Consumer Financial Protection Bureau estimates there is $1.1 trillion in outstanding student debt. Roughly 85 percent of the loans are guaranteed by the federal government. Millions of students and families who took out federal loans in recent years are paying record relative interest rates as borrowing costs across the economy have fallen for nearly everyone but student debtors.”
Even the interest rates of the “low-cost” Stafford loans, now at 3.4%, will double to 6.8% in July. So here we go again. Banks are banking big, big bucks; Wall Street is doing fine; big corporations, no sweat. But our students? Not so much.
The Education Department spokesman, Daren Briscoe, offered up solutions such as the Pay As You Earn and Income Based Repayment plans – and said that “the president has put forward a long-term solution that will help middle class students and their families afford college by lowering interest rates on July 1, without adding to the deficit.” However, that July 1 deadline only pertains to subsidized Stafford loans, which are only a quarter of all federal student loans estimated to be taken out in 2013.
For the 75% of other students – their only hope is Elizabeth Warren and Sherrod Brown, two Democratic Senators who have the cojones to take on big banks, Wall Street, and the powers that be. Warren rolled out her first bill this week, the Bank On Students Loan Fairness Act, which would set student loan interest rates at the rates big banks get from the Fed. Elizabeth Warren’s concept – “that the Fed could subsidize students instead of banks” – is a radical concept in some circles.
Investing in our young people. How radical is she.