Senator Warren Introduces Legislation Extending to Students Same Interest Rates Enjoyed By Big Banks
In First Bill Introduced, Senator Warren Calls on Congress to Stop Scheduled Doubling of Student Loan Interest Rates
May 8, 2013
WASHINGTON, DC – In a speech delivered on the floor of the United States Senate today, Senator Elizabeth Warren called on Congress to stop student loan interest rates from doubling this summer and introduced her first piece of stand-alone legislation, which would allow students to pay the same interest rate on their government loans as big banks. On July 1st of this year, student loan interest rates are set to jump from 3.4 to 6.8 percent, while banks can borrow from the Federal Reserve’s discount window at a rate of approximately .75 percent.
In her remarks, Senator Warren argued that while providing banks with cheap access to credit should help economic recovery, supporting our college graduates is also essential to a strong economic future and must be a priority. Student debt poses a risk to household spending and is a threat to middle class stability, both of which threaten economic recovery. The legislation introduced today would allow students to borrow funds at the same low rate that banks borrow from the Federal Reserve for a year, providing a window for Congress to find a fair, long term solution on student loan interest rates.
“Some people say that we can’t afford to help our kids through school by keeping student loan interest rates low,” said Senator Warren. “But right now, as I speak, the federal government offers far lower interest rates on loans, every single day – they just don’t do it for everyone. Right now, a big bank can get a loan through the Federal Reserve discount window at a rate of about 0.75%. But this summer a student who is trying to get a loan to go to college will pay almost 7%. In other words, the federal government is going to charge students interest rates that are nine times higher than the rates for the biggest banks – the same banks that destroyed millions of jobs and nearly broke this economy. That isn’t right. And that is why I’m introducing legislation today to give students the same deal that we give to the big banks.”
“Big banks get a great deal when they borrow money from the Fed,” Senator Warren continued. “In effect, the American taxpayer is investing in those banks. We should make the same kind of investment in our young people who are trying to get an education. Lend them the money and make them to pay it back, but give our kids a break on the interest they pay. Let’s Bank on Students… Unlike the big banks, students don’t have armies of lobbyists and lawyers. They have only their voices. And they call on us to do what is right.”