A bipartisan group of Senators said that they have reached a deal on student loan interest rates. But a spokesman for Senate Majority Leader Harry Reid (D-NV) said the deal will not pass the Senate, according to The Hill. Student loan rates will double from 3.4 to 6.8 percent in three days, on July 1, if no deal is reached.
“There is no deal on student loans that can pass the Senate because Republicans continue to insist that we reduce the deficit on the backs of students and middle-class families, instead of closing tax loopholes for the wealthiest Americans and big corporations,” Reid’s spokesman said.
Meanwhile, Senate Minority Leader Mitch McConnell’s (R-KY) spokesman blamed Democrats for “blocking bipartisan student loan reform.” Last month, Senate Republicans filibustered a Democratic bill that would have prevented a spike in student loan rates by freezing the interest rates for two years, calling it a campaign move that Democrats knew would fail.
With only three days to go before student loan rates double to 6.8 percent, the Senate continues to quibble over what should be an easy problem to solve. Senator Elizabeth Warren (D-MA) seems to be one of the only politicians who understands the urgency of the student loan debt crisis.
“Let’s be clear: Right now the federal government is making a profit from our students. Just last month, the Congressional Budget Office calculated that the government will make $51 billion this year off student loans. Think about that: $51 billion…” Warren said this month.
Warren ripped apart the argument that the country can’t afford to keep interest rates low. “We have the money to cut interest rates if we’re willing to reduce the profits we make from our students,” she said. Warren called for a rejection of Republican plans to make more money off the backs of American college students.
“The big banks borrow at less than one percent… Our college students already see that the system is rigged against them. They watched Wall Street bankers get bailed out while their parents lost jobs and struggled to hang on to their homes. They see special subsidies for companies that ship jobs overseas, and exploit tax loopholes, while the investments in their future, in jobs at home, disappear,” Warren stated.
Republicans proposed to tie student loan interest rates to the 10-year Treasury bill, a proposal that was also blocked earlier this month. The newest proposal would require undergraduates to pay a rate equal to 1.85 percent above the 10-year Treasury rate, The Hill reports. Graduates would pay 3.4 percent above the 10-year Treasury rate.
Over 38 million Americans have outstanding student loan debt, totaling over $1 trillion, according to the Consumer Financial Protection Bureau. “Have we become a people who will support our big banks with nearly free loans while we crush our kids who are trying to get an education?” Warren asked. “This is morally wrong, and we must put a stop to it.”
Alisha is a writer and researcher for Ring of Fire.