April 13, 2014

Boston Globe: Elizabeth Warren decries US college loan profits

By: Dan Adams

April 13, 2014

US Senator Elizabeth Warren blasted government profits on student loans in a speech at Suffolk University's Law School on Saturday, firing up a crowd of law students, education researchers, and financial specialists.

"This exploding debt is crushing our young people," Warren, a Democrat, said in her speech to attendees of a two-day student loan symposium. "These students didn't go to the mall and run up a bunch of charges on credit cards. They worked hard to learn new skills that will benefit this country. . . . They deserve our support, not an extra tax for trying to get an education."

Warren's speech, peppered with the familiar battle cries that buoyed her election campaign, outlined policy changes she has long sought on student lending, a signature issue for the first-term senator.

Still, for many in attendance Saturday, Warren's presence was significant. To them, she is a long-awaited ally in the halls of power and the articulate public face of a reinvigorated effort to reduce ballooning college loan debt.

"She presents it in a way that it's hard to imagine anyone wouldn't be supportive of what she's proposing," said Suffolk's president, James McCarthy.

Warren drew applause as she called for an end to government profits on student loan interest, the reinstatement of bankruptcy protections for student borrowers, and penalties for colleges whose students default on their loans in large numbers.

Last summer, Warren defied her party and voted against a compromise bill that lowered interest rates on new subsidized federal loans, saying it would allow interest rates to rise and leave the government holding profits earned on the backs of student borrowers.

But in brief comments to a reporter following her speech, Warren framed that bill's passage as an encouraging sign of bipartisan support for lowering interest rates - this time, she hopes, on existing student loans.

"Congress agreed overwhelmingly that any interest rate above 3.8 percent was too high, so this Congress should not have difficulty with the same view on past loans," she said.

Saturday, Warren again displayed her willingness to be a fly in the Democratic ointment, denouncing a provision in the White House's proposed 2015 budget that would cap forgiveness of federal loans for college students who go on to work in the public sector. Currently, graduates who work full time in public service can have the remainder of their federal loans forgiven after making 120 monthly payments, which usually takes 10 years.

"I'm not a fan of capping," Warren said in response to a question from an audience member, repeating a proposal she made last year to forgive a portion of a graduate's loans for each year the graduate spends working in public service. "We should be encouraging every young person to spend some time in public service."

But, Warren said, fighting the White House on the measure is "not the number one, first thing we're going to work on."

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