Student Loan Bill Passes, Despite Opposition

Jacqui Kenyon
Posted

elizabeth warrenWednesday evening, the Senate made a decisive move about the fate of student loan interest rates, which rose to 6.8% from 3.4% on July 1st of this year.

The bill, which is now headed to the House of Representatives, will lower interest rates for college borrowing to 3.9%, 5.9% and 6.4% for undergraduate students, graduate students and parents, respectively. These rates will be tied to the interest rate on money borrowed from the federal government, and thus are expected to increase as the economy improves, CBS News reports.

However, Democrats insisted that caps be imposed so student loan rates wouldn’t go through the roof. Undergraduate rates are capped at 8.25%, graduate student rates are capped at 9.5% and rates for parents are capped at 10.5%.

Elizabeth Warren Speaks Out Against the Bill

The bill triumphed in the Senate despite ardent opposition by Senator Elizabeth Warren, a Democrat from Massachusetts, who said, “I understand that compromise isn’t always pretty, but there isn’t any compromise in this bill.”

Warren, who made lowering student loan rates a major part of her campaign last year, takes issue with the bill because of the revenue it creates for the government from the wallets of American students. In an email to bill supporters, she said that if the bill passes, it could generate $184 billion in profit.

“I can’t support a proposal that squeezes even more profits out of our kids,” she wrote in the email. “In fact, I think this whole system stinks.’’

Warren and her supporters—largely other Democrats from New England—would like to extend the previous interest rate of 3.4% for one more year while congressmen create a long-term solution wherein the government doesn’t profit from student loans.

RELATED: 4 Ways to Fix the Broken Student Loan System

Unfortunately for Warren and her supporters, MSN Money reports that the bill will face an “easy path” to passage in the House. President Obama called the bill a “major victory” for students in the U.S., and stated that he hopes the House passes the bill as well so he can sign it into law immediately.

  • Young Millenial

    I agree with Warren. The student loan interest rate shouldn’t be any higher than the 3.4% it was before. That is plenty, many young professionals including me are in serious debt from student loans even before new bill because of tuition increases and the fact that our parents couldn’t afford to pay for it. The cycle is vicious because if you don’t have a college degree in something you will have a much harder time finding jobs that pay well unless you are one of the few who are lucky and create your own business that takes off, but those people are few and far between. Not all college programs are the same either and to have to pick a college based on financial reasons is ridiculous too. Community colleges most often times don’t offer what the larger colleges offer. This 184 billion is ghost money. It is a giant bubble that will pop in 4-6 years once these students are unable to pay back the loan at a certain amount of time or very slowly. Also, with the loan forgiveness program the government won’t see all of the money anyways. The system is broken, we need someone to fix it. So far there has been no attempt to cap tuition rates. They keep increasing higher than inflation and so does the cost of living while you are in school. This is a terrible situation to put young people in. It’s all about the money, it is really a sad state of affairs right now with the way our economy is dictated as well as the laws. Not to mention that housing prices are increasing at a rate higher than they did before the collapse in 2008. We are headed down the same old road with these compromises.