Senator Warren recently proposed legislation that would allow students to refinance their loans (Flickr/Edward Kimmel).
Senator Elizabeth Warren is renewing her effort to help former college students pay back their student loan debt.
Warren wants to bring high student loan interest rates down to the rates that are offered to new borrowers this year.
Earlier this week, WGBH’s On Campus caught up with the senator shortly after she left the floor of the Senate where she filed a bill to do just that.
On Campus: If successful, what will this bill mean for those who have outstanding student loan debt?
Warren: Their interest rate payments will be cut for many of them by hundreds of dollars a year and for many more by thousands of dollars a year.
Students will still pay all of the principle, so they’re paying all of the cost of going to college. They will pay all of the administrative costs of handling student loans, the bad debt losses the cost of the funds and actually a little bit above that. But what students won’t be paying is the money that is producing tens of billions of dollars in excess revenue for the government.
Anyone who has a student loan, whether it’s a federal student loan or a private student loan, would be eligible to refinance. With interest rates at historic loans, homeowners have refinanced their mortgages. Small business owners have refinanced their outstanding business loans. Heck, even municipalities have refinanced their debt. But former students have not been able to do that. And so we’ve got 40 million people out there dealing with student loan debt.
On Campus: How do you plan to pay for this proposal?
Warren: The pay-for here is the Buffet Rule. There’s going to be a floor, we’re going to close up some of those tax loopholes, so that billionaires have to pay taxes at least at the same rate that their secretaries do. Our proposal is to take the money from the Buffet Rule – every nickel of it – and put it straight into reducing the interest rate on student loans.
On Campus: What would you say to those who think the real problem is the rising cost of college?
Warren: We need to bring down the cost of college and there are a lot of proposals on how to do this. I’ve got a bill outstanding right now with Senator Reed of Rhode Island and Senator Durbin of Illinois that would cause colleges to have some skin in the game, so when students can’t manage their student loans it’s not just the responsibility of students and the taxpayers but colleges also have some skin in the game. We think that’s one way to deal with rising costs.
We can’t let the need to bring down the cost of college overall blind us to the fact that we must bring down the interest rate on the outstanding student loans.
On Campus: What is the likelihood this bill passes?
Warren: Last year, nearly every Republican in Congress in the House and the Senate voted for the exact same loan rates that are in this legislation. Speaker of the House John Boehner embraced the 3.86 rate for new undergraduate borrowers as consistent with Republican policy proposals.
So if Republicans believe that this rate is good enough for new undergraduate borrowers then it should be good enough for all existing undergraduate borrowers. After all, we should bring down the rate for all our kids.
There’s no reason on earth to say some kids get a better deal than others. They all did what we wanted them to do: work hard and get an education.