Student advocate Elizabeth Warren fought against a fellow Democrat on Tuesday in the on-going student loan interest rate fiasco. An anonymous senator told The Hill that Warren “came out very strong against Manchin,” referring to Democratic Senator Joe Manchin (WV), who proposed to tie student loan interest rates to the 10-year Treasury rate.
“They’re already making money off the backs of students, and this adds another $1 billion,” Warren said.
Warren was referring to a deal brokered between Republicans and some Democrats two weeks ago, when Sen. Richard Burr (R-NC) negotiated with Sen. Joe Manchin (D-WV) and a handful of other Democrats to create a proposal to tie student loan interest rates to the 10-year Treasury rate, a deal similar to ones previously proposed and blocked.
The deal would reduce the deficit by $1 billion over 10 years, thereby exploiting struggling college students and recent graduates to balance the budget, according to Warren.
Student loans now total more than $1 trillion, and the government is expected to make $34 billion off of student loans this year. Senator Warren has been attempting to fight exorbitant student loan interest rates for months.
During a private caucus meeting Tuesday, members of Congress continued to debate student loan interest rates, which doubled from 3.4 to 6.8 percent on July 1 because Congress failed to act.
The Senate voted Wednesday on a Democratic proposal to freeze student loan interest rates for one year, even though a Democratic proposal to freeze student loan interest rates was filibustered last month by Republicans.
The bill, sponsored by Sen. Jack Reed (D-RI), garnered 51 votes, all Democratic, falling short of the 60 needed to quash a GOP filibuster, The Hill reports. Manchin and Sen. Angus King (I-ME) both voted against it.
The interest rate for new student borrowers remains at 6.8 percent, while the Federal Reserve allows big banks to borrow at a rate of about 0.75 percent. According to the Congressional Budget Office, more than seven million students are expected to take out student loans, with these new interest rates, in 2013.
Warren has been persistent in her role as student advocate, and has consistently criticized fellow politicians for proposing legislation that allows the country to profit off of students. She has often drawn attention to the absurdity of charging students much higher loan rates than big banks are required to pay.
“Does it make any sense for a Fortune 500 company, that makes high-profit student loans, to be able to borrow money for less than one-third of one percent from a program that has federal backing… ?” Warren asked the Senate Banking Committee for Housing and Urban Affairs.
Warren later sent a letter to the CEO of Sallie Mae, in which she accused the company of “finding unique ways to profit from government programs, [while] its borrowers are paying interest rates that are far in excess of the low cost of funds supported by the US taxpayers.”
“If we are serious about investing in our future, we should help our students pay for their education – not find ways to squeeze more profits from them. I believe it is time to align priorities in Washington with those of the American people,” Warren added.
Alisha is a writer and researcher for Ring of Fire.