Sen. Warren: Student loan interest rates are ‘crushing’ students

Sen. Elizabeth Warren (D-MA) says student loan interest rates are ‘crushing’ former students, and something needs to be done.

She introduced a plan in March that would let student loan borrowers refinance their loans at lower interest rates.

And last week, she filed the bill with the support of 27 co-sponsors.

Plan would let borrowers refinance at 3.86%

Sen. Warren’s place would let current borrowers and students in repayment refinance their federal and private student loans at the current interest rate for new federal loans of 3.86%. This was the rate Congress agreed on back in July.

Sen. Warren’s bill would provide relief for many borrowers struggling to repay student loans at much higher rates.

She estimates that this change will save the typical college graduate about $1,000 per year, with savings even greater for those who have older undergraduate loans, graduate loans or private loans.

We’ve got 40 million people across this country who are struggling with student loans, many of them at very high interest rates. They are crushing our former students, they are crushing our families, and it’s starting to create a drag on our economy.

Government making billions off student loans

Sen. Warren says it’s unfair that we let borrowers refinance their auto loans and mortgages at lower interest rates, but we don’t do the same for student loans. And since these loans can’t be discharged in bankruptcy, there’s no way out for students who get in over their head with debt.

The likely reason for this?

The government makes a heck of a lot of money off of student loans, an amount the senator calls “obscene.”

The United States government right now is hauling in tens of billions of dollars in excess in the cost of doing those loans, making an additional profit off the backs of those kids.

A temporary solution–but a good one

As we’ve written before, student loan reform doesn’t address the real problem of the cost of college being so high that it forces students to take out these large loans.

But unlike past bills, this would actually help those who are currently struggling with student loan repayment and expect to be doing so for decades.

While experts say it’s unlikely the student loan bill will pass, we’re keeping our fingers crossed–and hoping that Congress can come to an agreement that would help reduce the $1.2 trillion in student loan debt.