The case for lowering federal student loan interest rates
This awesome op-ed by Sen. Elizabeth Warren and Rep. John Tierney lays out the case for lowering interest rates on all federal student loans. Sen. Warren and Rep. Tierney argue that if banks can get special treatment from the government and are able to borrow at low rates, there’s no reason why students cannot.
Right now, a bank can get a loan through the Federal Reserve at a rate of less than one percent. If student loan interest rates double to 6.8% as they are set to on July 1, students will be paying a rate that is nine times higher than the same banks that contributed to the economic crisis. Meanwhile, the federal government is making billions off of student loans. Sen. Warren and Rep. Tierney say the government should not be making a profit off students already burdened by debt.
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.”
Less than two weeks ago, Warren introduced the Bank on Students Loan Fairness Act, a bill that would lower the federal student loan interest rates to 0.75%. According to her website, the bill has already received support from dozens of universities and education-related organizations.
Check out our related posts about Warren’s bill and other bills recently introduced by legislators to give students a break on their loans. Regardless of whether these bills pass, your student loans still have to be repaid. Make sure to check out our tips on repaying your loans and feel free to contact us if you’re having trouble affording your monthly payments.