Why does the government give the big banks a better deal than it gives students?
It’s question so perfect that people can’t stop talking about it.
The first standalone bill from Senator Elizabeth Warren (D-MA) would not only prevent student loan rates from doubling, it would cut them down to the same rate the Fed charges banks to borrow money overnight for the next 12 months. And the idea has taken off like wildfire, with more than 400,000 people signing on to support the legislation.
Many — including Campaign for America’s Robert Borsage, who calls it “a subsidy in America’s future” — are praising Warren’s temporary proposal as a perfect short-term bailout for graduates who are suffering disportionately in our slow recovery.
But “serious” policy minds aren’t pleased, and are trying to trigger a backlash against Warren’s proposal.
“Sen. Warren’s proposal should be quickly dismissed as a cheap political gimmick,” writes the Brookings Institution’s Matthew M. Chingos and Beth Akers.
“With that mix of populist rhetoric and subterfuge, Senator Warren stands to whip up a mob of angry students (and pundits) who will demand that the government drop the interest rate on student loans to 0.75 percent,” Yahoo! Finance’s Jason Delisle. “Good luck reasoning with a mob.”
Getting a mob interested in student loan debt is exactly what Warren intended to do — and it’s working.
With more than one trillion dollars in student loan debt, the economy is increasingly stifled by the burden on young people coming to age in the midst of the Great Recession. Immediate and decisive action is necessary.