Massachusetts Democratic Sen. Elizabeth Warren posted a petition on MoveOn.org to garner support for her first standalone bill, which would force the Federal Reserve to lend tuition money to students at discounted interested rates.
The petition, which was created by the senator herself, calls on Congress to approve the Bank on Students Loan Fairness Act. Just under 300,000 people have signed it.
The bill prevents the interest rate on student loans from doubling on July 1 — from 3.4 to 6.8 percent — by freezing it at .75 percent for one year. This is the same interest rate that banks enjoy when they borrow money from the Federal Reserve.
Students deserve to pay the same interest rate on their debts as banks do, said Warren.
“Wall Street banks — the ones that wrecked our economy — should not be getting a better interest rate on their government loans than young people trying to go to college,” the petition states.
But several financial experts told The Daily Caller News Foundation that there were good reasons to lend more generously to banks than students.
“In order to protect the taxpayers’ investment, student loan rates should remain higher than those for other borrowers,” said Alex Pollock, a fellow at the American Enterprise Institute, in an interview with TheDC News Foundation, noting that students have a much higher default rate than banks.
Jane S. Shaw, president of the Pope Center for Higher Education, warned that Warren’s bill would further inflate the cost of higher education by encouraging students to borrow even more money.
The pit of total student loan debt is over $1 trillion deep.
Still, the bill appears to be popular with students. One person who signed the petition recently wrote: “‘I long for the day when I close my eyes… Oh! what a day! And my student loan dies…’ Thanks, Sen. Warren.”
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