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| Republicans and Democrats are battling over what to do about the student loan crisis. Image: Edudemic.com |
While House
Republicans managed to approve a bill that would put a Band-Aid over the
student loan rates set to double to 6.8% on July 1st, Democrats,
including President Obama, say the bill is just not good enough. The Republican bill would tie student loan
rates to the rates of Federal borrowing, but leave interest rates at variable
percentages after the loan has been taken.
The White House has said variable loan rates are unacceptable and a
burden to families trying to budget for education costs.
The House plan is
estimated to put borrowing rates at about 4.4% this year, and undergraduate
loan interest would be capped at 8.5%.
Newly elected Senator Elizabeth Warren of Massachusetts blasted the bill
for taking advantage of students and allowing the Federal government to rake in
massive profits from loans of students trying to better themselves. Warren has introduced
a counter bill, her first sponsored piece of legislation. The Bank on
Student Loan Fairness Act, as it is called, would set student loans at a fixed
rate of .75%, a rate that Warren claims is the rate that big banks get to
borrow money from the Federal Reserve.
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| Students today are crippled by massive student loan debt. Image: Jeff Parker / Florida Today |
Already, Warren’s
bill is gaining momentum. Six other senators, all Democrats, have signed on to
cosponsor the bill and a corresponding bill is being introduced in the
house. Large institutions like the
American Federation of Teachers and the Massachusetts Institute for Technology
have already endorsed it. Meanwhile, the
July 1st deadline rapidly approaches and reaching a consensus on
student loan rates looks as unlikely as any other congressional issue this
year.
The Congressional Budget Estimates student loans already
cost the Federal taxpayers $5.7
billion after defaults are taken into account. Higher rates, some say, would help pay for
the high percentage of loans that are not repaid. Senator Warren thinks putting the burden on
students is unfair, especially in an environment where corporations are receiving
better treatment.
Do you agree?
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