Senator Elizabeth Warren introduces her first bill. Or is a simple proposal to give students the same loan rates as the nations biggest banks. Her proposal would allow the cut rate loans for students for one year, to give Congress time to cone to an agreement on a long term solution to interest rates. Federal Staffordshire subsidized loan rates for students are set to double on July 1 to 6.8%.
Senator Warren said “If the Federal Reserve can float trillions of dollars to large financial institutions at low interest rates to grow the economy, then surely theyvcan float the Department of Education the money to fund our students. That can keep us competitive and growvthe middle class.”
The proposal drew some blowback from the Banking Industry. Patrick Sine, a director in policy research at Hamilton Place Strategies, argued a short term loan from the discount window during a time of crisis is not comparable to a long term student loan. Some people have called for higher rates or penalties fir banks that access the discount window. The point of the funding is to prevent a liquidity crisis and is not how banks fund themselves over time.
Senator Warren noted that large banks can currently borrow from the Federal Reserves discount window at a rate of about 0.75%. But when the rate for student loans increases it would be 9 times what banish pay. The same banks that destroyed millions of jobs and nearly broke the economy are getting a break, but our students are getting comparatively fleeced.
The CFPN, Warren’s brain child, said last year that student loan debt has topped $1 TRILLION. They warned of the dramatic effects on our economy if those borrowers cannot buy a home or save for retirement. Warren also noted the serious risk to economic recovery that student debt poses, that students ate just as important to economic growth as big banks. The impact on our economy would be devastating if a large amount of student loans defaulted. Warren dismissed the idea that the bill would be expensive. The Federal government earns 36 cents in profit on every dollar it lends to students. That will bring in a total of $34 billion next year.
Of course Republicans are against this bill. They have sided with the Banking Industry on many issues leading before this, there is no sign that they will withdraw their support. Plus the Banking Industry has a strong lobbying presence in the capital, we saw what the NRA did with that. Republicans take the same stance as the banking industry. The bill will cost to much and that student loans are different than bank loans. Republicans tend to stand with the money and the Banking Industry has poured quite a bit of scratch into Republican coffers.
After what the Banking Industry did leading up to the Great Recession we obviously need a person like Senator Warren to champion for the people. The banks need to be treated as any other citizen, remember Republicans believe corporations are people too. So those corporations should be subject to the same laws and not be protected by corporate laws.
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