Elizabeth Warren Wants College Loans to be Like Car Loans
Senator Warren wants college students to be able to refinance their student loans and have flexible terms like a car buyer.
One problem. Most people don’t buy cars that cost up to and over $100,000.
Ben Jacobs writes, via Yahoo News.
Pay for College Like a Car
Elizabeth Warren wants paying for college to be like paying for a car.
No, she doesn’t want mandatory airbags in colleges or Presidents’ Day sales on tuition. Instead, the senator from Massachusetts wants students to be able to refinance federal student loans.
Unlike a loan to pay for a house, a vehicle, or just about anything else your heart desires, you can’t refinance a student loan. The result is that student loans have become a rare way for the federal government to generate revenue, making $66 billion in profits off them between 2007-2012. Warren told The Daily Beast that she is discussing legislation with colleagues that would allow students to refinance their federal loans at rates currently offered to new borrowers. The legislation will be introduced in the coming weeks as Warren continues to work with other senators from both parties on the exact language.
Warren has long been working to reduce the $1.2 trillion in student loan debt currently held by Americans, seeing it as deeply problematic that the federal government makes a huge profit on student loans. In her opinion that “does not reflect our values” and presents a threat to the economic recovery. Warren cited a recent report that cited student borrowing as hurting the economy because the debt overhang kept many purchasing cars or houses.
The senator helped lead an unsuccessful fight against the Bipartisan Student Loan Certainty Act in the summer of 2013, which allowed the interest on future student loans to float freely at market rates, rather than face a government cap. Now, she simply wishes to apply those market principles to existing student loans. With current interest rates at around 3 percent, she notes that “the ability to refinance for someone who has an high interest loan could make the difference” about whether they’re able to pay the rent or not.
