Lazy Activism has already covered the epidemic of student loan debt in America, and now a fresh piece of legislation hopes to bring some of that $1,200,000,000 in debt to heel. The Massachusetts Senator, Elizabeth Warren, has proposed The Bank On Students Emergency Loan Refinancing Act, the entire wording of which can be found here.
Education Without Penalty:
With student loan debt making up one of the largest portions of personal debt in America, it is abundantly clear that something needs to be done to fix this problem. Many students, fresh out of high school, sign their lives away to loans they barely understand. This action ensures them an education, as well as debt for years to come.
Getting an education should not have a harsh penalty of high loans with immense interest rates attached to it. The high cost of colleges is another matter entirely, but Senator Warren’s latest effort goes after the rates at which these loans are signed. Warren is not alone, since 23 other senators have also signed on. For those of you keeping score at home, that’s 24% of the United States Senate approving such actions. It really is a simple bipartisan issue, but of course, in this current politically toxic environment, nothing is ever truly as easy as it seems.
Lowering Past Debt:
According to the Project on Student Debt, 71% of ambitious people who graduated college in 2013 have student debt. The problem is real, large, and fixable. In an initial bipartisan effort, Congress lowered interest rates for new borrowers. A great first step, but what about all of the old debt out there?
That’s where Warren’s new plan kicks in. Her new bill would allow everyone with student loan debt to refinance to the lower prices used for last year’s congressional endeavor, and the Buffett Rule would provide the funds needed to accomplish this goal. The Buffett Rule, named for the famed, responsible billionaire, Warren Buffett, states that no household making over $1 million dollars a year should pay a smaller share in taxes than a middle class family pays and is a testament to a progressive tax system. The difference in interest rates will be made up by using the money earned from providing a fair tax code.
While tax increases for the rich are anathema in an America where income equality is reaching upward into historic levels, they are necessary to help the future of this country start their professional lives on the right foot. By refinancing their loans, students will save money that will be invested back into the economy, and not just into the pockets of those already making fortunes off of loans.
When the tax increase portion of the bill was announced, bipartisan support vanished as fast as expected but there’s a second issue that Republicans will scoff at.
The government saying you can refinance government loans is within their purview, but when the government says you can refinance loans held by private insurers is where things get messy. Government intervention into business is nothing new but still remains controversial, and even combative to a segment of the population. Yet, government action is needed to protect consumers from exorbitant loans and rates. For many Americans, a strong notion is instilled within them that, if they do not go to college after high school, they will make less money and have a worse life. So if a student was faced with the decision to either go to college with the help of a predatory loan or skip higher education, how can one blame the student for wanting to get an education?
No one should greatly profit off of an education other than the person being educated. High interest rates and high amounts of debt don’t just affect those fresh off campus, they are a burden on the economy because it bars recently graduated students from buying new cars, houses, or investing their wages. If all it takes to invest in America’s students, who are the future, is a bit of refinancing, and a modest increase in taxes by those who do not have to worry about paying for an education, how can the country morally say “no”? The final details of Senator Warren’s bill will be haggled over, but the core issue seems so simple, you wouldn’t even need a college education to agree with it.
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