Why Can’t Students Borrow at the Same Rates as Banks?

How serious of an issue is student loan debt? In the United States alone, student debt is poised to hit the $1 trillion mark soon. Stafford loan interest rates will double to 6.8% in a couple of months if Congress doesn’t act. Many expect that student loan debt will be responsible for an upcoming economic crisis.

American’s young adults are crippled by this debt. Having been told that going to college is the responsible choice, they accept tens of thousands of dollars in loans that haunt them for years if not decades to come. Lower interest rates would certainly alleviate some of this financial burden, but you’ve got to charge significant interest to make lending money worthwhile.

Well, unless you’re one of the countries largest banks. The government is happy to loan to their toxic BFFs at the low rate of just 0.75%. It seems fair to give the wealthy the nicest financial breaks while saddling America’s youth with massive debt, right?

Enter freshman Senator Elizabeth Warren, who has already made a name for herself by standing up to the corrupt banks and calling a spade a spade. As TPM reports, Warren has proposed legislation that would allow students to borrow money at the same rate that the large financial institutions are offered.

“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,” Warren said, adding, “That isn’t right.”

 

The government typically justifies its loan deals to the banks by citing that giving these institutions money is an investment in the country’s economy and future. But using that logic, shouldn't students fall into the same category? Why is educating our up-and-coming generations and providing them with a ticket to financial stability not considered an equal investment in the country’s economy and future?

Warren is taking a novel approach to her legislation, as well. Rather than first seeking her party or the President’s approval like most high-ranking politicians do, she’s floating the idea to the public first, in the hopes of gaining widespread support. It’s probably a smart decision on Warren’s part. The average American is bound to see the common sense in this proposal, whereas the powers-that-be are bound to find an excuse to shut it down.

As it stands, the American government profits greatly from student loan debt. The Congressional Budget Office determined that the government makes 36 cents in profit for each dollar it loans to college students. Additionally, the banks – those same corporations that are gifted minuscule loan rates – have also exploited higher education for profit. For example, Goldman Sachs found that by pressuring high school graduates to enroll in schools they cannot afford, it could profit for decades to come off of their student loan payments.

Though still in early stages, Warren hopes her proposal can be adopted before the current student loan plan expires in July. While she acknowledges it is a temporary fix for a much larger problem, it is a step toward ensuring that young people seeking an education aren’t sidelined with a lifetime of debt.


MORE AT: NBC News

 

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Well, banks are criminal organizations that own our government, students are just guileless and have yet to become slaves to our Overlords. If you believe otherwise, you need to support Sen. Elizabeth Warren's attempt to drop student loan rates to the same level that the Fed leant money to criminal banks.

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