United States Senator Elizabeth Warren and Congressman John Tierney today visited the American Student Assistance (ASA), and joined students, professors, college administrators and higher education policy-makers for a roundtable discussion on student loan reform. Senator Warren and Congressman Tierney addressed the Bank on Students Loan Fairness Act, the bill they introduced in the Senate and House that would stop student loan interest rates from doubling and allow students to pay the same interest rate on their government loans as big banks.
Since introducing the legislation, Senator Warren and Congressman Tierney have seen an outpouring of support from students and their families, colleges and universities, and groups who understand the economic strain caused by student loan debt. Today, roundtable participants echoed that support and stressed the need for student loan reform.
"If Congress lets student loan interest rates double this summer, our kids will pay rates nine times higher than the big banks on their government loans. That's wrong," said Senator Warren. "We should be encouraging our students by investing in their education. Keeping interest rates low not only will help young people who are drowning in debt, but also will strengthen our economy and help grow the middle class."
"While the same Wall Street banks that brought our financial system to the brink of disaster can access 'cheap' money, middle-class students are having to borrow at a much higher rate to finance their college education," said Congressman Tierney, the only New England Member on the House Education and the Workforce Committee. "As the students here today have highlighted, that's unjust and offensive. The legislation Senator Warren and I introduced would make an investment in our students' future as well as provide students and families across the country with real relief. Congress must take immediate action to stop the doubling of the student loan interest rate on July 1."
"Controlling student loan interest rates for future borrowers is a great first step in keeping student debt manageable without restricting access to higher education," said ASA President Paul Combe. "We also believe more needs to be done to help borrowers who already have loans to manage the debt without missteps. ASA is committed to empowering students to take charge of their finances, and make wise borrowing and spending choices before, during and after college."
On July 1st of this year, student loan interest rates are set to jump from 3.4 to 6.8 percent, while banks can borrow from the Federal Reserve's discount window at a rate of approximately 0.75 percent. Senator Warren and Congressman Tierney discussed their legislation and argued if we are going to provide big banks with cheap access to credit, we must do the same for our students. Student debt poses a risk to household spending and is a threat to middle class stability, both of which threaten economic recovery. The Bank on Students Loan Fairness Act would allow students to borrow funds at the same low rate that banks borrow from the Federal Reserve for a year, providing a window for Congress to find a fair, long term solution on student loan interest rates.
Established in 1956, ASA is a private nonprofit whose public purpose mission is to assist students and parents in accessing and completing a program of higher education financing and repayment. Through a game-changing educational membership program called "SALT," ASA equips students and alumni with money skills for life so they reduce their student loan debt, improve student loan repayment outcomes, and increase their overall financial empowerment.