Bank on Students Loan Fairness Act: Why Can't Students Pay the Same Interest Rates as Big Banks?
For a country that needs millions more college graduates to keep our economy growing, we seem hell-bent on making that college degree harder to get.
The latest attack on students considering college is a Republican bill that promises the doubling of interest rates on student loans — from a modest 3.4% to an excessive 6.8% — that is set to go into effect on July 1. This rate increase would create a financial crisis among new college students who are applying for federal government loans to pay exorbitant tuition fees, at a point where student debt in this country already tops $1 trillion.
Sound ridiculous? It gets worse.
The Republican Party is praising the bill as a way to balance the federal budget, but the Department of Education, who issues the loans, already makes $51 billion a year on interest alone. Not only is it unfair to force future generations to make up for the financial mistakes of the previous one, but it’s simply insane to require them to do so to the tune of more than $60 billion a year – a sum vastly greater than the annual profit of any Fortune 500 company.
Worst of all, this increase comes at a time when interest rates for almost every single other loan are incredibly low – and the government’s interest on loans to big banks are at 0.75%.
Why should our college students, the future of this country, pay nine times as much interest as the banks that “destroyed millions of jobs and broke our economy?”
Representative Elizabeth Warren (D-Mass.) doesn’t see a reason for it, and that’s why she’s introducing the Bank on Students Loan Fairness Act. If passed, the bill would require the Federal Reserve to provide student loans at the same rate offered to banks for one year. Students would be able to get financial access to the education that they (and this country) need, and Congress would have a temporary reprieve to find a more permanent solution.
As a college student myself, I can only thank Warren for pursuing rational and reasonable policy that doesn’t use college students as a sacrificial lamb. Several other companies and organizations have also taken up Warren’s mantle, from the prestigious Massachusetts Institute of Technology to the American Federation of Teachers and the United States Student Association, not to mention the hundreds of thousands of letters, phone calls, and petition signatures Warren has received from individual students and parents.
While the House Republicans may only see students as cash cows to be milked for their irresponsible fiscal policies, we are, at the very least, worth as much investment in our education as they would like to invest in their big business.