An Uneducated Society Can't Succeed-- Or Even Survive
Elizabeth Warren noted to her supporters that the Senate had a big test yesterday-- and flunked it. She pointed out that Senate Republicans filibustered a vote on the Reed-Harkin Student Loan Affordability Act-- legislation that would freeze federal Stafford student loan interest rates at 3.4% before the big July 1st deadline. A majority of senators voted to shut down Miss McConnell's deranged anti-student filibuster, but every Republican plus multimillionaires Joe Manchin (D-WV) and Angus King (I-ME), killed the amendment by defeating cloture. "Let me just make it clear," wrote Warren. "This wasn’t my own bill to help students more by lowering interest rates to 0.75%, the same rate the banks pay. This was a bill that would simply extend the current 3.4% rate for two more years... Are we really a country that wants to push our kids tens of thousands of dollars into debt to go to school? Or are we a country that believes investing in our kids-- from Head Start to college-- to put the conditions in place so that everyone has the chance to succeed?"
She probably knows the answer to that question. The deck is stacked against us-- which reminds me of a George Carlin video I haven't watched in a while, The American Dream:
Van Jones has a different way of expressing some of the same ideas-- and he did so for CNN this week. His point is societal, not just something that impacts students. "The approximately $1.1 trillion in student debt out there already," he warns, "constitutes a crisis for every one of us." Like anyone with a lick of sense, he understands why Elizabeth Warren's proposal to cut student loan rates to 0.75% is something that wouldn't just be great for students but for the whole society.
In short, student debt is a $1.1 trillion anvil dragging down the entire U.S. economy.
Unfortunately, the conversation in Washington is not about big fixes, but simply how to avoid making matters worse by letting interest rates rise.
...A few weeks ago, Warren, D-Massachusetts, proposed groundbreaking legislation that would give students the same deal that big Wall Street banks get. This bill is good policy, and even better politics.
After all, why are we loaning money to mega-profitable international financial institutions at 0.75%, but demanding up to nine times more from our own young people?
By comparison, the otherwise ideal Harkin-Reid proposal for a two-year extension of the current 3.4% rate is simply not as ambitious.
Unfortunately, the proposals with the most energy behind them are worse than both these options. House Republicans, the Obama administration, and a number of senators are all pushing to permanently tie the rate for student loans to the government's borrowing costs.
It may seem commonsense, but the devil is in the details.
For instance, the Republican plan passed recently is just plain bad for students. Interest rates on July 1 would actually be higher than 6.8% for some borrowers, and vary wildly and unpredictably over the lifetime of the loan. The government would mark up the costs 2.5% to 4.5%, based on the type of loan. The profit would pay down a deficit young people did not create, instead of funding education.
The Obama plan, by contrast, has better terms for borrowers and would offer fixed-rate loans that will not suddenly spike in cost. But it lacks any cap on how high interest rates can go, and continues the worrying practice of the government profiting off student loans.
As for borrowers who already have loans? Sen. Kirsten Gillibrand, D-New York, has proposed allowing students to simply refinance their old loans at today's historically low rates. It is almost shocking that you cannot do this already. California Democratic Rep. Karen Bass' Student Loan Fairness Act would make repayment fairer and easier.
Young people should be rallying behind the Warren, Bass, and Gillibrand bills. But they can and should demand a whole lot more.
The problem is not just that the cost of borrowing could go up. The real problem is the skyrocketing cost of tuition that is forcing students to take on unmanageable levels of debt in the first place. It is in our leaders' own best interests to do something about that.
After all, millennials will make up one-third of eligible voters in 2020. It is no accident that the two best Senate bills were introduced by senators-- Warren and Gillibrand-- who have been rumored as future presidential candidates.
But at the end of the day, this is not a student issue. It is not a youth issue. This is a corrosive crisis that touches your life whether you know it or not. If you live in the United States of America, this is your issue.
Please login first in order for you to submit comments