Should student loans be offered at the same rate that the banks receive? That rate happens to be 0.75%, which begs the question as to why the banks are paying such a low rate at all. Many senators are careful not to make too many waves during their first term, and while Elizabeth Warren has already shown her intelligence and tough mentality regarding the corrupt banking system, she has now unveiled her first standalone piece of legislation, and it’s gold.
In her first standalone piece of legislation, Warren wants to require that student loans are offered at the same rate that banks pay (currently 0.75 percent from the Federal Reserve).
In her Senate remarks introducing The Bank on Students Loan Fairness Act, Warren bluntly states her rationale: “If the Federal Reserve can float trillions of dollars to large financial institution, surely they can float the Department of Education the money to fund our students, keep us competitive, and grow our middle class.”
Needless to say, Warren has her priorities straight when it comes to investing in the future of America. It is our higher education system – now deteriorating due to austerity measures and rapidly escalating tuition – that built the foundation for US skills and innovation in the private and public sectors. [ truth-out.org ]
This is not only a brilliant political maneuver, but it will help the economy and bring awareness to just how outrageous an advantage the banks have over the rest of us. The timing of this proposed bill is also key. On July 1st, without necessitating action from Congress, Stafford loan interest rates for some 7 million students will double from 3.4 percent to 6.8 percent.
There’s already a gigantic problem when it comes to student loan debt. On the individual level it hurts graduates who are entering into a difficult job market already burdened by a sizable debt. On the economic scale it does not help the country, as money spent on debt does not stimulate the economy in the same manner money spent on a mortgage, or simply injecting more income back into the economic pipeline by spending it on goods and services.
A Wise Political Maneuver
It will be difficult for Elizabeth Warren’s fellow democrats to vote this bill down in consideration of the fact it impacts many of their constituents for the long run. These men and woman graduating college are engaged enough in politics to vote in force. Many of them will remember which politicians had their back when it came to throwing off the shackles of debt, versus those who voted to keep the status quo, and ensure their rates went up to 6.8 percent, a figure that will cost many of them tens of thousands of dollars before their loan is paid.
Equally it will be difficult for republicans to vote down the bill without similarly displeasing their constituents, for though many of them are most likely fiscally conservative, when the contrast of what the bank pays for rates versus their own children, it may hit a bit close to home for them to ignore. It’s also fair to point out that this is exactly the kind of action Elizabeth Warren promised during her senate campaign, and I imagine voters will at least appreciate that kind of rare consistency.
‘Bank on Students Loan Fairness Act’’
To prevent the doubling of the interest rate for Federal subsidized student loans for the 2013-2014 academic year by providing funds for such loans through the Federal Reserve System, to ensure that such loans are available at interest rates that are equivalent to the interest rates at which the Federal Government provides loans to banks through the discount window operated by the Federal Reserve System, and for other purposes. [ warren.senate.gov ]
The above is from the bill itself. Given that the American tax payers bailed out the banks when they all but destroyed the world economy, why do we continue to reward their behavior in favor of imposing austerity? The reason, of course, comes down to money in politics made viral by Citizens United.
We know austerity isn’t working anywhere on the globe right now, in fact we even sent Jack Lew over to Europe to tell them just that. Putting proposed cuts to medicare, medicaid and social security aside for now, our education system is failing, and while this legislation won’t fix the problem in and of itself, it’s one step in the right direction. It will benefit the US as a whole to have students emerging from Universities pursuing their careers instead of laboring to pay off inflated interest on their debt.
Does This Student Loan Bill Stand A Chance?
Of course this bill may face fierce opposition, and may fail, though you can be certain the politicians in Washington would sooner lower interest rates on student loans than raise them on the banks. Their campaigns are funded by them, after all. It will be interesting to see how this plays out, for surely it will embitter those indentured to the banks for making it difficult for them to oppose the legislation without looking more corrupt than they already do.
Don’t be fooled by any cries of socialist redistribution of wealth , there’s always redistribution of wealth. It just depends if you want it to be redistributed to the banks, who do not have the best interests of some 99% of Americans at heart – and not only are they corrupt and influencing politicians, but they seem to be pretty shitty at their jobs too-, or if you’d like to see that wealth distributed to those who not only need it, but will inject it right back into the economy.
Who knows, some of those graduates might just decide to open up a small business with the money they’ll save on reduced student loan repayments. That’s a notion the GOP should celebrate, if not for the fact their interests, and the interests of many democrats, don’t lie with the American people, but with the banks. Now it’s time to see just how transparently subservient they are to their bank masters when it comes to dealing with this legislation.